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Screens showing the Hang Seng stock index and stock prices outside the Exchange Square in Central, Hong Kong on August 18. Photo: Reuters
BusinessMarkets

Hong Kong stocks slip to 5-week low as Meituan sinks 12% to erase post-Covid rebound amid slowdown warning

  • Meituan warned of a slowdown in demand for its services in the current quarter, pressuring margin outlook
  • The Hang Seng benchmark has erased all of its gain in November, after losing 15 per cent in the preceding three months
Hong Kong stock market
Jiaxing Li
Zhang Shidong
Jiaxing Liin Hong KongandZhang Shidongin Shanghai
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Hong Kong stocks slumped for a fourth day, dragging the benchmark index to the lowest level in five weeks. China’s top food-delivery platform operator Meituan plunged after warning about a slowdown in demand for its services.

The Hang Seng Index dropped 2.1 per cent to 16,993.44 on Wednesday, the lowest level since October 24. The index earlier fell as much as 2.7 per cent to a 12-month low. The Tech Index retreated 2.3 per cent while the Shanghai Composite Index lost 0.6 per cent.

Meituan tumbled 12 per cent to HK$90.45, a level not seen since March 2020, after the company said food delivery business will cool this quarter. Alibaba Group weakened 2.2 per cent to HK$72.70 and JD.com slid 1.6 per cent to HK$106.60 on concerns rival PDD Holdings is gaining market share at their expense. Baidu dropped 4.1 per cent to HK$115.10 while BYD slipped 3.3 per cent to HK$211.80.

“Hong Kong stocks are being severely punished, one of the worst days this year,” said Dickie Wong, executive director at Kingston Securities. “Investors just lost confidence in this market.”

This week’s setback has erased all the Hang Seng Index’s advance in November and more. The 80-member benchmark index has declined 0.7 per cent, adding to a 15 per cent slump in three preceding losing months, as China’s sluggish economic recovery eroded optimism among investors.

“All the [stimulus] so far have only provided the support on the margins instead of a significant boost,” Caroline Maurer, head of China and Hong Kong equities at HSBC Asset Management, said at a media briefing on Tuesday. Investors will not come back in meaningful way amid doubts about the strength of recovery, she added.

Mainland Chinese investors have sold HK$2.7 billion (US$345 million) worth of local stocks this week through Tuesday, following HK$405 million of net selling last week, Stock Connect data showed.

China has tightened interbank liquidity to help stabilise the yuan, after the currency weakened to a 16-year low last quarter, according to BCA Research. Households and businesses are suffering from low confidence amid widespread deflationary pressure, reducing the efficiency of Beijing’s policy stimulus, it said.

“A cyclical recovery in China’s economy is still not imminent,” the Montreal-based research firm said in a report on Tuesday. “Gravity forces remain intense.”

Elsewhere, Alibaba Health erased gains of as much as 6.2 per cent, closing 0.9 per cent lower at HK$4.62. The company agreed to buy AJK Technology, the healthcare marketing unit of Alibaba Group’s Taobao, for HK$13.5 billion (US$1.7 billion). The firm also appointed Shen Difan as its new chief executive officer.

CSOP Saudi Arabia ETF, the first exchange-traded fund in Asia that tracks the Middle East’s biggest companies including Saudi Aramco, jumped on its first day of trading in Hong Kong. The dual-currency ETF rose by 0.3 to 0.8 per cent against its reference pre-trading net asset value.

Beijing Jingyi Automation Equipment rallied 76 per cent to 56.19 yuan on its first day of trading in Shanghai.

Other major Asian markets were mixed. Japan’s Nikkei 225 slipped 0.3 per cent while Australia’s S&P/ASX 200 added 0.3 per cent. South Korea’s Kospi lost 0.1 per cent.

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