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Models pose near the BYD Seal 06 Dmi unveiled during Auto China 2024 held in Beijing, Thursday, April 25, 2024. BYD gained on Wednesday after rival Xpeng’s first quarter earnings beat estimates. Photo:AP
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Hong Kong stocks edgy before Lenovo, Meituan earnings with market view divided after 4-week rally

  • EV maker Xpeng trimmed losses in the first quarter fuelling a rebound in the high-flying sector
  • Goldman Sachs, UBS Group and HSBC Holdings are bullish on China’s markets while Morgan Stanley and JPMorgan Chase’s private-banking unit remain cautious
Banking & finance
Jiaxing Li
Jiaxing Li
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Hong Kong stocks retreated further from 10-months high as sentiment turned edgy ahead of big tech earnings, with the 4-week rally showing some signs of fatigue.

The Hang Seng Index ended day 0.1 per cent lower at 19,195.60, extending Tuesday’s 2.1 per cent retreat. But the Tech Index added 0.3 per cent while the Shanghai Composite Index was little changed.

Gaming firm NetEase weakened 2.8 per cent to HK$154 and food delivery platform Meituan declined 0.7 per cent to HK$120.60 before their earnings announcements later today. Alibaba lost 1.7 per cent to HK$82.95, and peer JD.com dropped 2.3 per cent to HK$128.90 after the company announced a US$1.75 billion of convertible bonds sales which has the potential to dilute earnings.

Gainers included Li Auto which jumped 2 per cent to HK$82.25 retracing some of Tuesday’s losses while its peer Geely added 1.4 per cent to HK$10.38, after rival Xpeng’s first quarter earnings beat estimates. PC maker Lenovo surged 12.7 per cent to HK$11.44 and smartphone maker Xiaomi added 0.9 per cent to HK$19.48 ahead of their earnings announcements later today.

“The sustainability of the current rally will be decided by how quickly the improved sentiment translates into stronger earnings,” BNP Paribas strategists including Jason Lui said in a note on Tuesday. The market is likely to see a gradual upside in the near term, they added.

This file photo taken on November 14, 2009 shows a plaque for investment banking giant Goldman Sachs in Hong Kong. Photo: AFP

The city’s benchmark index has declined 1.8 per cent so far this week after a 4-week winning streak, with technical analysts saying charts indicated the rally has taken the market into an overbought zone. Sentiment has also cooled on the back of patchy corporate earnings.

Some top global investment banks are now divided about China’s stock market outlook. Goldman Sachs, UBS Group and HSBC Holdings have a bullish view, while Morgan Stanley and JPMorgan Chase’s private-banking unit are cautious, arguing that the rally has run its course.

Among other laggards, Tencent retreated as much as 1.8 per cent after it suspended the blockbuster game Dungeon & Fighter Mobile, hours after its launch which was blamed on server problems.

Other key Asian markets were mostly lower. Australia’s S&P/ASX 200 lost by 0.1 per cent and Japan’s Nikkei 225 declined 0.9 per cent, while South Korea’s Kospi was little changed.

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