Alibaba sinks to record low while mainland China funds flee from tech sell-off in Hong Kong
- Alibaba slumped to an all-time low and Meituan plunged before its earnings report later this week as stock bulls paid the price for mistimed optimism
- More than US$160 billion has been erased from Chinese tech stocks traded in Hong Kong and New York over the past week
The Hang Seng Index lost 1.2 per cent to 24,651.58 at the close of Tuesday trading, the lowest level since October 6. The Hang Seng Tech Index retreated 1.4 per cent, while the Shanghai Composite Index climbed 0.2 per cent.
Mainland investors, who contribute to more than a fifth of daily transactions, have taken their money off the table. They have sold HK$9.3 billion (US$1.2 billion) worth of Hong Kong stocks so far this month via the Stock Connect link. If sustained, that would be the first monthly outflows since August, according to exchange data.
“To reverse the downtrend, we need to see signs of bottoming in regulatory crackdowns and China’s economic slowdown, as well as an easing in global inflation,” said Wei Wei, an analyst at Ping An Securities. “We have had none of these elements at the moment.”
Tech companies are under pressure to deliver after big earnings misses by Alibaba Group Holding and Bilibili. Alibaba, the owner of this newspaper, and food-delivery giant Meituan both sank 3 per cent.
Earnings released so far by 22 companies on the Hang Seng Index have trailed the analysts’ estimates by 2.9 per cent, Bloomberg data showed. The index member outperformed the market by 1.6 per cent in the second quarter.
Chinese sportswear makers, Li Ning and Anta Sports Products both declined by more than 4 per cent. Kuaishou gained 1.2 per cent after falling more than 1 per cent intraday. The short-video sharing platform operator reported a 7.1 billion yuan loss versus consensus estimates for 8.6 billion yuan after trading ended.
Meituan completed a five-day losing streak. China’s biggest on-demand service delivery firm may say on Friday that quarterly loss widened to 5.25 billion yuan from the previous three-month period.
Markets in Asia-Pacific were mixed. Equities rose in Australia and declined in South Korea. US stocks fell overnight as the reappointment of Jerome Powell as Fed chair fanned speculation about faster tapering, sending Treasury yields higher.
