Hong Kong stocks fall by most in a week as corporate earnings seen faltering amid China slowdown

Latest earnings reports surprised by 7.2 per cent to the downside, with material producers, tech companies and banks the biggest culprits: Bloomberg data

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An electronic billboard displaying the Hang Seng Index and stocks outside the Exchange Square in Central on August 22, 2023. Photo: Yik Yeung-man

Published: 11:00am, 24 Nov 2023Updated: 4:38pm, 24 Nov 2023

Hong Kong stocks dropped by the most in a week amid signs corporate earnings from benchmark index members are trailing market expectations.

The Hang Seng Index slumped 2 per cent to 17,559.42 on Friday, paring the gain for the week to 0.6 per cent. The Tech Index weakened 2.2 per cent while the Shanghai Composite Index retreated 0.7 per cent.

Alibaba Group dropped 1.4 per cent to HK$76.20, Tencent lost 2.4 per cent to HK$321.20 and online game operator NetEase slid 3.4 per cent to HK$175.20. EV maker BYD tumbled 5.5 per cent to HK$228.40, while Meituan slipped 2.8 per cent to HK$109.10 before its quarterly report card next week.

Some 31 of 80 Hang Seng Index members have released their earnings reports for the September quarter, generating an average 6.5 per cent growth from a year earlier, according to Bloomberg data. The outcome has so far surprised by 7.2 per cent to the downside, with material producers, technology companies and banks being the biggest culprits.

“The concerns about corporate earnings have now returned to the market that was excited by China’s supportive measures and falling US Treasury yields,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “Earnings cannot surprise investors to the upside, given the weak foundation for the economic recovery.”

China’s economic growth will probably slow to 1 per cent this quarter on a quarter-on-quarter basis from a 1.3 per cent increase for the previous three-month period, according to consensus among analysts tracked by Bloomberg.