Alibaba, HSBC, BYD lead stock slump in Hong Kong on surprise drop in Chinese manufacturing

Chinese manufacturing unexpectedly shrank in October against forecasts for continued expansion, a government report shows

BYD tumbled on concerns EV maker may not be able to sustain its record-breaking profits in a wobbly domestic economy

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A woman walks past a screen displaying the Hang Seng Index outside the Exchange Square in Central. Photo: Reuters

Published: 10:32am, 31 Oct 2023Updated: 4:51pm, 31 Oct 2023

Hong Kong stocks slumped, capping a third straight month of losses, after a government report showed Chinese manufacturing unexpectedly shrank in October. BYD tumbled on concerns China’s top EV maker may not be able to sustain its record profits.

The Hang Seng Index retreated 1.7 per cent to 17,112.48 on Tuesday, the biggest drop in almost two weeks. The city’s stock benchmark lost 3.9 per cent in October, brining the cumulative decline to 14.8 per cent since end-July. The Tech Index fell 2.5 per cent, while the Shanghai Composite Index was little changed.

Alibaba Group declined 2.2 per cent to HK$80.05 while e-commerce peer JD.com fell 1.3 per cent to HK$99.95. Baidu slumped 3.9 per cent to HK$102.90, and Meituan weakened 2.7 per cent to HK$110.90. HSBC tumbled 1.6 per cent to HK$56.30, while online travel operator Trip.com slipped 3.9 per cent to HK$268.80.

Factory activity in mainland China contracted this month, with the official PMI manufacturing index dropping to 49.5 from 50.2 in September, the statistics bureau in Beijing said on Tuesday, versus market consensus of 50.2. The non-manufacturing gauge fell to 50.6 from 51.7 in September. A reading below 50 indicates contraction.

The struggle in Chinese equities “reflects the deep confidence crisis the country is experiencing,” Yan Wang, chief China strategist at Alpine Macro, said in a report. “Caution is still warranted. Without more aggressive policy reflation from Beijing and a decisive cyclical upturn, Chinese stocks will likely remain highly jittery, despite deeply depressed valuations.”