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A vendor talks on his phone next to a screen showing stocks data at a stall in a market in Shanghai. Photo: AFP

Hong Kong stocks snap 3-day rally before Tencent and Alibaba earnings while developers retreat on China stimulus concerns

  • Tencent has reportedly started a new round of lay-offs before its third-quarter report card due later today
  • Property developers surrender some of this week’s gains as analysts view Beijing’s policy incentives as insufficient to end the industry rot
Hong Kong stocks slipped, snapping a three-day rally as Chinese tech giants wavered before earnings report cards from Tencent Holdings and Alibaba Group this week. Property developers lost traction amid concerns that the stimulus measures fall short to revive the sector.

The Hang Seng Index fell 0.5 per cent to 18,256.48 at the closing of Wednesday trading, retreating from a seven-week high. The Tech Index declined 0.2 per cent while the Shanghai Composite Index lost 0.5 per cent. An index tracking US-listed Chinese stocks surged 7.6 per cent overnight in New York.

Country Garden tumbled 15.3 per cent to HK$2.71 and Longfor retreated 5.6 per cent to HK$20.35, leading declines among Chinese developers as analysts and money managers, including those at BCA Research, Trivium China and abrdn, said the recent stimulus efforts did not go far enough to end the rot in the property market. Alibaba Group, which reports on Thursday, dropped 0.1 per cent to HK$78.80. Analysts forecast the e-commerce group, the owner of the South China Morning Post, to report a small drop in income.

Limiting losses, Tencent Holdings added 2.2 per cent to HK$294.40 amid local media reports the WeChat operator has started a new round of lay-offs as it prepares to release its third-quarter report today.

“The plunge in the share prices of property developers is a justified correction, as they are still struggling with debt crisis, and the recent policies won’t have an immediate impact,” said Dickie Wong, an executive director at Kingston Securities. “I’m more optimistic on the tech companies, as their earnings are likely to be solid and there’s no regulatory headwinds facing the sector.”

Chinese EV makers eye Southeast Asian markets as competition escalates at home

Neither of the recent changes to China’s Covid-19 or real estate policies look to be significant enough to reverse the drag on growth that both are currently creating, analysts at Beijing-based consulting firm Trivium China wrote in a research note. “Headwinds to growth will persist.”


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Government reports this month showed activity weakened in October, partly because of tighter Covid-19 controls. Retail sales fell more than expected, while industrial production grew at a slower pace and property sales saw a deeper 23 per cent slump. Growth momentum in the first two weeks of November remained weak, UBS said.

BYD tumbled 1.8 per cent to HK$192. China’s biggest electric-vehicle maker by sales canceled a plan to spin off its semiconductor manufacturing unit through a stock listing, and decided to invest more money to boost production in the unit to meet chip demand in the EV industry.

The Hang Seng Index has appreciated over 24 per cent so far this month, contributing to a US$800 billion recovery in market value of the broader Hong Kong market. The Tech Index has risen 33.4 per cent during the same period.

Asian stocks were mixed on Wednesday. The Nikkei 225 in Japan added 0.1 per cent, while the benchmark indices in South Korea and Australia declined 0.1 to 0.3 per cent.