Hong Kong stocks drop as tech rally fades before Xiaomi, Kuaishou earnings reports

Hang Seng Tech Index surrendered most of its 3.5 per cent gain as traders locked in profits before interim report cards from Xiaomi, Kuaishou

Cathie Wood’s Ark Investment appears to be turning less bearish even as China has not signalled any easing in regulatory crackdown

Reading Time:2 minutes

Pedestrians walk outside the Exchange Square building in Central, Hong Kong. Photo: AFP

Published: 11:51am, 25 Aug 2021Updated: 5:17pm, 25 Aug 2021

Hong Kong stocks retreated as a two-day rally in Chinese tech companies prompted traders to lock in gains while the market awaited more earnings reports from industry leaders.

The Hang Seng Index slipped 0.1 per cent to 25,693.95 at the close of trading on Wednesday, reversing an earlier rally of as much as 1 per cent. Anta Sports sank 6.8 per cent after the Chinese sportswear maker signalled a slowdown in sales momentum. The Shanghai Composite Index added 0.7 per cent.

The Hang Seng Tech Index surrendered a 3.5 per cent intraday gain to end with a 0.2 per cent gain. The three-day advance was the index’s longest winning stretch in six weeks.

Meituan added 2.3 per cent after earlier gaining as much as 6.3 per cent. Tencent Holdings slipped 0.6 per cent, reversing a 4.2 per cent advance and Alibaba Group Holding, the owner of the newspaper, lost 1.4 per cent.

Caution prevailed after the local market clawed its way out of bear territory amid bargain hunting and technical support, even though China’s top policymakers have not signalled an end to the regulatory crackdown that wiped out more than US$1 trillion of value in recent weeks.

“Investors should take a defensive strategy, given that market sentiment is fragile,” said Shen Yandong, an analyst at Wanhe Securities. “In the short term, the market will continue to be rattled by policies as well as economic growth momentum and liquidity issues.”