Hong Kong stocks slide on earnings drag as data to signal further contraction in Chinese manufacturing

Report cards from PetroChina, BYD, Vanke and China Life Insurance underwhelmed the market as slowdown hit home

A government report this weekend may signal another month of contraction in China’s manufacturing under the stress of power cuts

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A woman walks past a bank's electronic board showing the Hang Seng Index Kong share index on October 25. Photo: AP

Published: 10:46am, 29 Oct 2021Updated: 4:46pm, 29 Oct 2021

Hong Kong stocks fell, completing the first weekly loss in five, as corporate earnings underwhelmed the market on China’s economic slowdown. Power cuts likely have dented Chinese manufacturing activity this month.

The Hang Seng Index dropped 2.8 per cent to 25,406.50 from a week ago, retreating from a seven-week high. The Hang Seng Tech Index lost 5.5 per cent in the week as Ping An Healthcare plunged by 15 per cent while Alibaba Healthcare Information hit a one-year low.

Some China’s biggest companies incurred losses or generated sharply lower earnings for the third quarter as economic recovery faltered. They included Ping An Insurance, oil producer PetroChina, carmaker BYD, developer China Vanke and heavy machinery maker Zoomlion, showing a wide impact across industries. They also echoed a difficult earnings season elsewhere, as Apple and Amazon issued disappointing report cards.

China Life lost 2.9 per cent to HK$13.60, among the benchmark index‘s largest decliners, after reporting a 54 per cent slide in earnings. BYD slid 1.3 per cent to HK$297.80 while China Vanke tumbled 5.3 per cent to HK$18.26. Zoomlion retreated 8.8 per cent to HK$5.62 as earnings slumped 46 per cent.

“Weak earnings were not unexpected given the economic slowdown, with an unfortunate combination of tighter regulations, power shortages and Covid-19 outbreaks,” said Stephanie Leung, deputy chief investment officer at wealth management firm StashAway HK. “However, the market is forward looking. We expect a recovery as these negative factors subside over the next few months.”