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

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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

Published: 11:07am, 16 Nov 2022Updated: 7:50pm, 16 Nov 2022

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.”

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