Hong Kong stocks drop as China regulatory concerns linger before reports signalling further slowdown in economy

Hong Kong stocks fell for a second day on lingering concerns that Beijing will extend its regulatory crackdown while traders braced for key data on China’s economic pulse.

The Hang Seng Index dropped 0.5 per cent to 26,391.62 at the close on Friday, reducing the advance this week to 0.8 per cent. Technology stocks paced losses as smartphone maker Xiaomi, Alibaba Group Holding and Tencent Holdings retreated by at least 2.4 per cent. The Shanghai Composite Index slipped 0.2 per cent.

Sentiment remained skittish as a plan released this week by the State Council, China’s cabinet, signalled policymakers will strengthen regulations to bring to order in a wider array of industries. The nation’s banking regulator was also said to be scrutinising the insurance sector for malpractices such as false advertising, according to media reports.

Analysts from at least 15 brokerages – from UBS Group and Goldman Sachs to Citigroup, Oppenheimer and CLSA – have slashed their price targets for Alibaba’s depositary shares by at least 40 times since early November, leaving the market to guess the bottom. Alibaba owns this newspaper.