Hong Kong stocks slide on weak corporate earnings as Bank of Korea raises rate to end easing policy
- A rally in Hang Seng Index proved fleeting as weak corporate earnings from Kuaishou, Evergrande dented sentiment
- Traders are looking for clues from the Fed on its bond purchases after the Bank of Korea exited from an ultra-loose monetary policy
The Hang Seng Index slid 1.1 per cent to 25,415.69 at the close of Thursday trading while the Hang Seng Tech Index slumped 1.9 per cent. AAC Technologies crashed 10 per cent, leading index losers after its second-quarter profit trailed analysts’ estimates. Kuaishou Technology and China Evergrande sank by at least 7 per cent on deteriorating profitability.
China’s Shanghai Composite Index dropped 1.1 per cent and a similar gauge of stocks on the Shenzhen retreated 1.5 per cent. Chinese baijiu or white liquor distillers Kweichow Moutai and Wuliangye Yibin, both index heavyweights, declined on worries the government would rein in price hikes.
Buying interest subsided as bargain hunting gave way to caution amid lingering concerns about regulatory clampdown and how much that has weighed on corporate earnings. Traders are also tur ning to the Federal Reserve’s annual Jackson Hole symposium this weekend for the clues on any possible cutback in its bond purchase stimulus.
Other major markets in Asia were mixed, after US equities rose to new highs. South Korea’s benchmark gauge slipped after the central bank raised its key interest rate to become the first in the region to withdraw from an ultra-easy monetary policy.
“The tech sector has not stabilised and investors should pay more attention to the safety of capital,” Essence Securities said in a report. The business models and long-term profitability of companies face the risk of reassessment and it will take time to digest the impact on valuations, it added.
Among key movers, Kuaishou slumped 9.2 per cent to HK$70.40. The Chinese short-video platform operator said losses in the second quarter widened to 7.04 billion yuan (US$1.09 billion) and it warned that regulatory curbs will weigh on its business.
On the mainland, Jiangxi Yuean Advanced Materials, which makes metal materials including carbonyl iron powder, surged 527 per cent from its initial public offering to 73.74 yuan on its first day of trading on Shanghai’s technology-dominant Star Market.