Hong Kong stocks slip amid earnings jitters, relief from yuan rebound short-lived

Investors tread water as 26 companies that are part of the 82-member Hang Seng Index, are due to release full-year results for 2023 during the week

The yuan currency posted the biggest daily gain this year against the dollar after the People’s Bank of China set a higher daily reference rate

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A group of delivery men of Meituan prepare to deliver food in Beijing. The food delivery giant reported a 22.6 per cent jump in fourth-quarter revenue, buoyed by strong orders from consumers enticed by discounts in post-pandemic China. Photo: AFP

Published: 10:50am, 25 Mar 2024Updated: 5:48pm, 25 Mar 2024

Hong Kong stocks fell, extending last week’s losses, as investors awaited earnings announcements this week from nearly a third of the companies that comprise the 82-member benchmark.

The Hang Seng Index slipped 0.2 per cent to 16,473.64 at the close, reversing a gain of as much as 0.7 per cent spurred early in the session from a rebound in the yuan. The Hang Seng Tech Index dropped 0.5 per cent and the Shanghai Composite Index slid 0.7 per cent.

Property developer China Resources Land fell 1.2 per cent to HK$23.95 and China Merchants Bank slipped 0.8 per cent to HK$29.95. Both will unveil their earnings later on Monday. Hong Kong Exchanges and Clearing slid 2.1 per cent to HK$233.20 and personal computer maker Lenovo Group tumbled 6.1 per cent to HK$9.14.

“The main theme this past week was corporate results that have disappointed expectations, with the earnings beat-miss ratio at -22 per cent, leading to more earnings downgrades,” said Chetan Seth, an analyst at Nomura Holdings, in a note. “This dashes hopes for a sustained recovery in Hong Kong and China stocks. Investors should continue to have some allocation on companies that are prime for increased share buy-backs and dividends, as a defensive strategy to protect against macro headwinds.”

A rebound engineered by China’s market-intervention measures, launched earlier this month, risks being short circuited by corporate earning shocks. The Hang Seng Index dropped 1.3 per cent last week dragged down by a batch of weak earnings from major companies including Tencent Holdings, Ping An Insurance and Li Ka-shing’s two flagship listed units.