Hong Kong stocks slip as SMIC’s weaker-than-estimated result spurs concerns about corporate earnings

Chinese chip maker Semiconductor Manufacturing International Corp (SMIC) reported third-quarter revenue and net income figures, with both missing analysts’ estimates

Tech giants Alibaba Group, Tencent and Meituan, which are due to publish quarterly results next week, all fell following SMIC’s earnings release

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A man takes pictures at the piazza in front of the headquarters of Hong Kong Exchanges and Clearing Limited (HKEX), Central. Photo: Elson LI

Published: 10:31am, 10 Nov 2023Updated: 4:41pm, 10 Nov 2023

Hong Kong stocks fell by the most in three weeks on Friday, and the benchmark ended the week in red, as earnings from Chinese chip maker Semiconductor Manufacturing International Corp (SMIC) disappointed, adding gloom to the outlook for corporate earnings.

The Hang Seng Index slumped 1.8 per cent to 17,203.26 at the close, taking the week’s loss to 2.6 per cent. The Hang Seng Tech Index tumbled 3.3 per cent and the Shanghai Composite Index retreated 0.5 per cent.

SMIC sank 6.8 per cent to HK$21.80 after third-quarter revenue and net income both missed analysts’ estimates. Alibaba Group Holding lost 3.1 per cent to HK$79.60, Tencent Holdings dropped 1.3 per cent to HK$302.80 and Meituan retreated 3.7 per cent to HK$110.70. The three tech giants are due to release quarterly results next week.

Casino operators slumped after Wynn Macau reported a third-quarter loss. Peers Sands China slid 3.5 per cent to HK$20.50 and Galaxy Entertainment sank 6.5 per cent to HK$41.25. Wynn Macau plunged 12.8 per cent to HK$6.08.

A raft of weak economic data has already cast a pall over the outlook for corporate earnings. Both consumer and producer prices fell last month, while exports declined by more than estimated and manufacturing unexpectedly contracted. The Hang Seng Index has fallen 13 per cent this year, the worst performance among key benchmarks globally.

“China’s economy is still seeking a bottom and that means corporate earnings may have yet to trough in the near term,” said Wu Kan, an investment manager at Soochow Securities in Shanghai. “While the weakness on corporate earnings may still weigh on stocks, there is limited room for downside on stocks as most of the negatives have been priced in.”