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Investors are growing weary as reports in China’s state-run media trigger stock losses and worries about regulatory tightening. Photo: AFP
BusinessMarkets

Hong Kong stocks log weekly advance as corporate earnings buoy outlook while regulatory concerns hit milk producers

  • China Mengniu and China Feihe stumbled after state-run Xinhua called for greater scrutiny on marketing of baby-milk formula
  • HKEX, MTR are among eight Hang Seng Index members due to report earnings in coming days amid regulatory challenges
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Zhang Shidong
Zhang Shidongin Shanghai
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Hong Kong stocks completed a weekly gain as corporate earnings lifted sentiment amid lingering concerns about regulatory crackdown in China.

The Hang Seng Index traded little changed on Friday to close at 26,179.40, or a 0.8 per cent advance for the week. The Shanghai Composite Index slipped 0.2 per cent, trimming the rally this week to 1.8 per cent.

Sentiment improved somewhat as Hong Kong heavyweights including CK Hutchison and Wharf REIC posted encouraging interim reports, tempering worries surrounding the regulatory storm in technology and education sectors. Tencent Holdings rebounded, while dairy makers declined after China’s state-run Xinhua News Agency called for greater scrutiny on the marketing of baby-milk formula.

“Investors should still remain cautious about the sectors that have been battered by policies or will be potentially affected,” Ping An Securities said in a report. “They are not in for a reversal in spite of the already sizeable downturn.”

Tencent rose 3.3 per cent to HK$453.60 for its best gain in a week. Meituan climbed 1.2 per cent to HK$213.80, but may come under pressure next week after the Wall Street Journal said Chinese authorities are readying a US$1 billion fine on the company under the antitrust law.

HKEX added 1.4 per cent to HK$529.50 before its earnings release on Wednesday. CK Hutchison rallied 2.6 per cent to HK$57.85 while CK Asset dropped 0.2 per cent to HK$52.40 as earnings at Li Ka-shing’s flagships beat estimates.

Eight companies in the Hang Seng Index, including bourse operator Hong Kong Exchanges and Clearing (HKEX) and subway operator MTR Corp, are due to report their first-half results in the coming week. They could offer clues on whether earnings are resilient enough to withstand the challenges in the fast-changing regulatory landscape.

China Feihe, the producer of baby-milk formula, tumbled 4.4 per cent to HK$14.06. China Mengniu Dairy, the nation’s biggest producer, slumped by as much as 5.9 per cent before trading unchanged at HK$44.95.

A Xinhua report on Friday blamed aggressive marketing for the higher consumption of formula milk over breastfeeding. Dairy producers became the newest victims as media reports stoked concerns about regulatory backlash after recent attacks on technology and private education firms.

Earlier reports on Thursday slammed liquor and e-cigarette device makers as state-run media befuddled traders seeking some semblance of calm or shelter from the ongoing regulatory storm.

Kuaishou Technology, which operates a short-video platform, tumbled 4.7 per cent to HK$84.90, extending a 15 per cent slump a day earlier sparked by the expiry of the lock-up period for a big chunk of the stakes held by pre-listing shareholders.

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