Hong Kong stocks slip as Meituan slumps amid competition while traders reassess Fed view on higher rates

Weaker vehicle sales added to signals China’s corporate earnings will take time to recovery from lingering Covid-19 impact on consumption

US interest rates need to be higher to control inflation given a red-hot labour market, Fed Chair Powell says

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People walking past stock screens outside a bank in Mong Kok, Hong Kong. Photo: Sam Tsang

Published: 10:45am, 8 Feb 2023Updated: 4:27pm, 8 Feb 2023

Hong Kong stocks declined as Chinese tech companies languished amid worries about corporate earnings and fund outflows, while investors reassess rate outlook after the Federal Reserve said borrowing costs would need to keep rising to put a lid on inflation.

The Hang Seng Index dropped 0.1 per cent to 21,283.52 at the close of trading on Wednesday. The Tech Index lost 1.9 per cent and the Shanghai Composite Index declined 0.5 per cent.

Meituan crashed 6.1 per cent to HK$153.70 and Alibaba Group slipped 1.2 per cent to HK$103.50, following reports that TikTok’s parent company ByteDance is planning to launch a delivery platform to rival market leaders. Alibaba Health tumbled 3.8 per cent to HK$6.10 and carmaker BYD weakened 2.2 per cent to HK$240 and peer Geely Auto slid 3 per cent to HK$11.72.

Limiting losses, HSBC advanced 2 per cent to HK$57.75 and New World Development jumped 2.1 per cent to HK$24.05, while Chinese developer Longfor Group rose 1.4 per cent to HK$24.95.

Mainland funds were net sellers of Hong Kong-listed stocks on Wednesday, taking HK$3.6 billion (US$458 million) off the table, according to Stock Connect data.

“The optimism is waning,” Zheng Jianxin, an analyst at ITG Futures in Xiamen, said in a research note. China’s economic recovery turns out to be weaker than what the market wants, and the US labour market is still strong, which increases the risk of excessive interest rate hikes, he added.