Hong Kong stock rally halted as Apple suppliers tumble on earnings risk, US election jitters

Hang Seng Index lost 3.3 per cent for the week, snapping a four-week rally while Shanghai’s benchmark retreated for a second week

Apple’s earnings failed to inspire as sales missed targets last quarter pending the launch of its 5G phones

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People crossing the street beneath a jumbo screen showing stock and currency exchange data in Shanghai. Photo: EPA-EFE

Published: 11:12am, 30 Oct 2020Updated: 5:09pm, 30 Oct 2020

Hong Kong and China stocks plunged on Friday after a choppy session, taking benchmarks on both sides of the border to weekly losses. Concerns over the latest round of earnings from technology giants mounted after Apple missed its sales estimates last quarter, slamming its suppliers.

The Hang Seng Index plummeted 2 per cent at the close of trading to 24,107.42 in its worst day since October 15. The 3.3 per cent drop for the week was the gauge’s first weekly decline in five.

The Shanghai Composite Index swung between gains and losses, before diving in late trading for a 1.5 per cent drop to 3,224.53. The gauge slid 1.6 per cent from Monday, capping a second weekly setback. The Shenzhen Component Index declined 2.1 per cent.

A sell-off in technology stocks deepened in the afternoon after US stocks futures opened much lower as global investors digested Apple’s iPhone sales miss, rising global coronavirus infections and concerns that the US presidential election outcome. Chinese fintech behemoth Ant Group’s initial public offering also drained market liquidity.

“There’s a degree of uncertainty weighing on the market, including the deteriorating global pandemic and the US election,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai. “The fact that Ant’s IPO soaked up so much liquidity also magnified the pressure to sell on any negative news.”

Apple’s stock plunged 4.2 per cent on Nasdaq in after-hour trading, after reporting a 21 per cent slide in third-quarter iPhone sales in anticipation of the new line-up of 5G model. The decline was worse than what the market expected, inducing steep losses in shares of its suppliers in Hong Kong and mainland China.