Hong Kong stocks surrender gains as investors dump Chinese tech stocks towards this year’s lowest point

Tech slumped by most in six weeks, overshadowing reports of faster growth in China’s services industry and manufactured exports

Tencent slipped to lowest level in almost four months, erasing some US$207 billion in market value from its all-time high in January

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People cross the street beneath a jumbo screen showing the latest stock and currency exchange data in Shanghai in October 2020. Photo: EPA-EFE

Published: 11:00am, 7 May 2021Updated: 5:26pm, 7 May 2021

Stocks in Hong Kong and mainland China erased gains, sending the markets into a second week of losses as investors dumped technology companies on valuation and lingering tensions in US-China relations.

The Hang Seng Index slipped 0.6 per cent to 28,610.65 for the week, adding to a 1.2 per cent setback in the preceding week on industry clampdown in China. Local stocks surrendered earlier gains of as much as 0.9 per cent when surprise economic data boosted risk appetite. The Shanghai Composite also erased some marginal gains to end the holiday-shortened week with a 0.8 per cent loss.

The Hang Seng Tech Index fell 2.2 per cent, the most in six weeks, sending the gauge of mostly Chinese technology powerhouses to within 11 points or 0.12 per cent of the lowest level this year. Sunny Optical was the worst-performing blue chip, plunging 8.1 per cent to HK$170.20. Tencent declined 1.7 per cent to HK$600, the lowest level since January 13. The stock has now lost the equivalent of US$207 billion from its peak of HK$766.50 on January 25. Short-video operator Kuaishou dropped 5.6 per cent to HK$244.20, while Baidu fell 2.2 per cent to HK$185.50.

“The market is still reluctant to chase tech stocks with too high valuations,” said Castor Pang Wai-sun, head of research at investment services firm Core Pacific-Yamaichi. He added that investors were discounting valuation as a result of tightening market regulation, he added.

Top trade negotiators from China and the US may hold their first conversation soon to review the phase one trade deal amid unsettling differences between the two governments over issues ranging from Xinjiang to South China Sea and investment sanctions.

Stocks rose earlier Friday after the Caixin/Markit PMI Services Index climbed to 56.3 in April, the highest since December, from 54.3 in March. The reading exceeded forecasts for a decline to 54.2 in a Bloomberg survey of economists. A separate report showed China’s exports growth quickened.

PetroChina rose 1.7 per cent to HK$3.08 as oil rallied for a second week to a two-month high of about US$65 a barrel. Budweiser Brewing added 2.4 per cent to HK$26.10, extending its biggest rally in five months on an earnings boost.