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People walk past a screen displaying the Hang Seng stock index in Central, Hong Kong in October 2022. Photo: Reuters
BusinessChina Business

Alibaba, NetEase slide with Hong Kong stocks in correction on mixed earnings while Techtronic halts sell-off

  • Alibaba Group, the owner of this newspaper, beat market estimates in third-quarter report, while job cuts signalled challenges ahead; NetEase missed consensus
  • Techtronic rebounded after rejecting a short-seller’s attack, without addressing allegations the tools maker inflated its profits
Hong Kong stock market
Jiaxing Li
Jiaxing Li
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Hong Kong stocks fell deeper into a technical correction, hitting the lowest level this year, following a mixed bag of earnings from Chinese big tech companies. Techtronic industries recovered from a 19 per cent plunge triggered by a short-seller attack.

The Hang Seng Index slipped 1.7 per cent to 20,010.04 at the close of Friday trading bringing the decline for the week to 3.4 per cent to cap a four-week losing streak. The Tech Index retreated 3.3 per cent, while the Shanghai Composite Index weakened 0.6 per cent.

Alibaba Group dropped 5.4 per cent to HK$90.05 after revenue grew 2.1 per cent to 247.76 billion yuan (US$35.9 billion) in the December quarter, while job cuts in 2022 helped trim costs. NetEase slumped 11.2 per cent to HK$123.50, after its net profit trailed market consensus. Baidu tumbled 6 per cent to HK$131.40 and Tencent dropped 1.9 per cent to HK$349.40.

“The old regime of unlimited expansion and unlimited upside is over” for Chinese internet stocks, Wang Qi, CEO of MegaTrust Investment said in a research note on Thursday. The sector will continue to face earnings uncertainty and massive valuation volatility, he added.

Wang in late January predicted that Hong Kong stocks could suffer a 10 to 18 per cent pullback in the next two months from the peak, as the reopening trade is running out of steam. The index has now lost more than 10 per cent since January 27, a technical correction that erased US$366 billion of value from the city’s broader market.

Techtronic rejects short-seller’s attack as stock halts sell-off in Hong Kong

The rally from late October lost momentum amid US-China geopolitical tensions and corporate earnings headwinds, while US rate concerns persisted. Traders this week raised the odds on higher Fed funds rate for June meeting amid sticky US inflation .

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Hong Kong consumption vouchers have ‘more psychological than real’ impact on boosting spending

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Elsewhere, Macau casino operator Galaxy Entertainment surged 2.6 per cent to HK$53.25 after the company reported better-than-expected earnings in the final quarter of 2022 and chairman Lui Che-woo said he was hopeful of a sustained recovery. Peer Sands China added 0.9 per cent to HK$27.70.
Techtronic advanced 4.4 per cent to HK$3.30. The Hong Kong-based power-tool maker rejected a report by short-seller Jehoshaphat Research that alleged the firm inflated its profits. The stock sank 19 per cent on Thursday, the most since November 2008, wiping out HK$32.2 billion of its market value.

Major Asian markets were mixed on Friday. The Nikkei 225 in Japan jumped 1.3 per cent and the S&P/ASX 200 in Australia advanced 0.3 per cent. The Kospi Index in South Korea declined 0.6 per cent.

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