Hong Kong shares fall for fifth session as Tencent hits 11-month low on surprise drop in profit
The Hang Seng Index has lost a total 5 per cent in the last five trading sessions, while the Shanghai index closed down for a fourth straight day
Hong Kong stocks extended their losing streak to a fifth straight session on Thursday, bringing losses to a total 5 per cent, dragged down by Chinese internet conglomerate Tencent Holding, which hit an 11-month low after reporting its first profit decline in 13 years.
Mainland China shares also fell, with Shanghai briefly dropping to its worst level in 17 months before paring losses by the close on expectations US-China trade tensions might ease.
Hong Kong’s benchmark Hang Seng Index closed down 0.8 per cent at 27,100.06. The Hang Seng China Enterprises Index, a gauge of Hong Kong-listed Chinese companies, ended 0.5 per cent lower at 10,479.68.
Tencent, the most heavily weighted stock in the benchmark index, tumbled 5 per cent at the open before finishing down 3 per cent at HK$325.80, the worst close since last September. The social media to gaming giant surprised the market by reporting after Wednesday’s close that its net income fell 2 per cent in the second quarter to 17.9 billion yuan (US$2.6 billion) from the previous quarter, the first profit drop since 2005.
Tencent’s president, Martin Lau, told a briefing on the earnings that mobile gaming revenue shrank as the company had difficult getting regulatory approval for its games, which has already affected the planned mobile launch in China of the hit game PlayerUnknown’s Battlegrounds.
Other tech and internet stocks extended recent losses.
Xiaomi, the world’s fourth-largest smartphone seller, dropped to its lowest close since going public in early July, down 0.4 per cent to HK$16.24. It has fallen 4.5 per cent from its IPO price of HK$17.
China Literature, a Tencent unit and China’s largest e-book and online publishing house, also plunged to the lowest level since its trading debut last November, down 5.2 per cent to HK$49.85. It was 9.4 per cent lower than its offer price of HK$55.
Elsewhere, WH Group, China’s largest pork producer and owner of US meat giant Smithfield Foods, was the biggest loser among blue-chip stocks, skidding 7.5 per cent to HK$6.08. It said on Thursday that one of its slaughterhouses in China had been sealed off by the government for six weeks due to an outbreak of African swine fever.
Other pork producers or processors retreated broadly. China Yurun Food Group shed 5.3 per cent to HK$0.9 and China Demeter Financial Investments slid 9.1 per cent to HK$0.05.
In mainland China, the Shanghai Composite Index settled 0.7 per cent lower at 2,705.19, falling for a fourth session in a row. Pork producers followed their Hong Kong-listed peers lower, with Henan Shuanghui Investment & Development, a unit of WH Group, falling by the maximum allowed 10 per cent to 22.41 yuan and Guangdong Wens Foodstuff Group tumbling 6.3 per cent to 21.18 yuan.
The large-cap CSI 300 lost 0.5 per cent to 3,276.73 while the Shenzhen Composite Index fell 1 per cent to 1,467.12.
Onshore yuan jumped as much as 0.8 per cent after falling to the lowest level in more than a year on Wednesday, before closing on Thursday at 6.8960 yuan per dollar, up 0.5 per cent, and the offshore currency also advanced. The gains came after China said it would send its vice-minister of commerce, Wang Shouwen, to the US for a new round of trade talks later this month, fuelling hopes that the trade tensions between the two countries might ease.