Hong Kong stocks slide to 2-month low as Putin orders Ukraine attack while Alibaba, HKEX earnings disappoint

Putin orders Russian troops to demilitarise neighbour Ukraine while the US and its allies dish out more sanctions
Alibaba’s earnings likely dropped 60 per cent in the latest quarter, while city’s bourse operator HKEX trailed market consensus

Hong Kong stock market

Cheryl Heng

Published: 10:46am, 24 Feb 2022

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Hong Kong stocks slumped to a two-month low as Chinese Big Tech led losses while global markets sank and safe haven assets surged after Russia attacked Ukraine. Concerns about weaker corporate earnings also hurt sentiment.

The Hang Seng Index retreated 3.2 per cent to 22,901.56 at the close of Thursday trading, the steepest drop since September. This week’s losses amounted to US$104 billion of market value through Wednesday. The Tech Index sank 4.3 per cent, while the Shanghai Composite Index lost 1.7 per cent.

Alibaba Group Holding, the owner of this newspaper, tanked 6.7 per cent to a record-low HK$104.90 before its earnings report on Thursday. Tencent Holdings and Meituan declined by more than 3.6 per cent. Hong Kong Exchanges and Clearing slipped 5.4 per cent to a one-year low as earnings in 2021 trailed consensus.

Asian markets suffered. Australian shares slid 3 per cent while Japanese and Korean equities lost at least 1.8 per cent. Russian forces fired missiles at several Ukraine cities after President Vladimir Putin authorised a military operation that Ukraine described as a “full-scale invasion.”

Oil surged to US$100 for the first time since 2014 on concerns the war in Europe could disrupt supply. Gold approached its record-high of US$2,063.54 set in August 2020. Ten-year Treasury yields fell below 1.90 per cent.

“A period of sustained geopolitical tensions and volatility in financial markets could adversely affect corporate confidence, leading corporates to hold back on capex and hiring decisions, weighing on growth,” Morgan Stanley said in a note on Wednesday.

06:00

Putin recognises 2 separatist regions in Ukraine, dulling hopes for US-Russia summit

Alibaba’s earnings probably dropped 60 per cent, its fourth contraction in a row since China foiled the jumbo listing of its associate Ant Group in November 2020 and tightened the screw on internet-platform operators throughout last year.

“Don’t expect too much from Alibaba, given that its valuation has fallen [to its lowest],” said Francis Lun, chief executive of Geo Securities. “I worry that tech stocks will not recover because of government and policy risks.”

The Hang Seng Index has dropped 2.1 per cent this year, as geopolitical risks and regulatory concerns challenged bullish bets based on policy easing in mainland China and cheap valuations.

Game developer NetEase, brewer Budweiser and developer Sun Hung Properties are also expected to unveil their report cards today. Twelve of the 64 members in the Hang Seng Index have reported their earnings this season, missing analysts’ estimates by about 1.7 per cent on average, according to Bloomberg data.

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