Hang Seng Index

Hong Kong stocks end slightly lower, dragged by Tencent and mainland home builders

PUBLISHED : Monday, 30 July, 2018, 6:12pm
UPDATED : Monday, 30 July, 2018, 6:12pm

Hong Kong stocks ended lower on Monday, dragged by a sell-off of internet giant Tencent as well as mainland property and carmaker shares, while expectations of infrastructure investment provided some support.

The Hang Seng Index edged down 0.3 per cent, or 71.15 points, to 28,733.13. The Hang Seng China Enterprises Index was little changed at 11,046.32. In mainland China, the Shanghai Composite Index ended down 0.2 per cent at 2,869.05.

“The tumble in US stocks had a negative impact on Hong Kong stocks, but market sentiment wasn’t too bad,” said Castor Pang Wai-sun, head of research at Core Pacific-Yamaichi.

The Nasdaq Composite fell 1.5 per cent to a two-week low on Friday following disappointing earnings results from tech companies such as Intel and Twitter.

Shares of Twitter plunged 21 per cent after the company reported negative user growth in its quarterly results on Friday.

The disappointing results from Twitter, in addition to downbeat guidance by Facebook on Thursday, weighed on investors’ appetite for Tencent, Pang said.

Tencent slid 1.6 per cent to HK$367.20 on Monday, its lowest level since December 6. The company will announce second-quarter results on August 15.

Country Garden, China’s largest developer by contracted sales, led the decline in mainland property stocks. The company’s stock fell 7.5 per cent to HK$12.14, after it called a halt to all construction projects on Friday following the deaths of six workers at a collapsed construction site in Luan city, Anhui province on Thursday. Construction work would resume when all safety issues are cleared, the company said in a statement on Friday.

Other developers also took a hit after the Xinhua published an opinion piece on Monday calling for more cooling measures to rein in home prices at third and fourth-tier cities. Greentown China, a Hangzhou-based developer, declined 6.5 per cent to HK$9.39. China Evergrand Group, the country’s second-largest developer by contracted sales, shed 1.8 per cent to HK$21.55.

Carmakers also performed poorly. Geely Automobile Holdings dropped 2.9 per cent to HK$17.88, after Morgan Stanley reduced its target price to HK$20 from HK$30 because it expected rising competition in the industry would weigh on Geely’s future profits.

Brilliance Auto, a Shenyang-based carmaker that has a joint venture with BMW, was down 5 per cent at HK$10.14. BMW said on Sunday it would raise the prices of two popular US-made SUV models by 4 per cent to 7 per cent from Monday in an attempt to offset the impact of new tariffs on cars. Beijing imposed an additional 25 per cent retaliatory tariffs on US car imports on July 6.

Infrastructure-related stocks bucked the downward trend and gained on the back of market expectations of more government infrastructure investment this year. Premier Li Keqiang called for faster infrastructure building in China’s underdeveloped inland region on Thursday during a visit to a construction site of the Sichuan-Tibet railway, which will connect Chengdu and Lhasa when it opens in 2026. Cement maker Anhui Conch Cement rose 3.2 per cent to HK$50.65.

CRRC Corp, a state-owned train maker, was up 5.1 per cent at HK$6.87 after Caixin reported on Friday that China Railway Corp planned to purchase freight cars worth over 100 billion yuan (US$14.65 billion) in the next three years.