Hong Kong shares see biggest drop in almost a year, led by declines in Tencent and Ping An

Hang Seng Index ends with its biggest weekly drop since December 2016 on Friday, after a week of corrections led by technology stocks, while Ping An sees its largest drop since January 2016

PUBLISHED : Friday, 01 December, 2017, 9:17am
UPDATED : Friday, 01 December, 2017, 10:53pm

Hong Kong stocks ended the week with its biggest weekly drop in almost a year, correcting a four-week rise, led by declines in internet giant Tencent and insurer Ping An.

The Hang Seng Index on Friday edged down 0.35 per cent, or 103.11 points, to end the week at 29,074.24 after swinging between gains and losses throughout the day. After touching an intraday mark of 30,000 last Friday, the benchmark index fell each day this week with an overall weekly loss of 2.65 per cent – the biggest weekly drop since December 2016.

The Hang Seng China Enterprises index fell by 0.23 per cent, or 26.29 points, to 11,449.43.

“Technology shares have faced downward pressure because of the year end, and some fund managers are trying to get profits for the start of next year,” managing director at Hantec Pacific, Gordon Tsui, said.

“It is a short-term period of market correction based on the positive performance of those companies in their annual results,” he said.

Tsui said investors would then take advantage of the correction to buy shares, which would give strength to the banking sector.

Tencent, the most heavily traded stock, slid 3.27 per cent to HK$385 by close, having lost US$49 billion in market value in less than two weeks. The quarterly review results of the Hang Seng Index, which came into effect after Friday’s market close, saw the weighting of Tencent adjusted down to 10 per cent from 11.58 per cent.

Still, the correction would provide an opportunity for long-term investors to accumulate the stock, Morgan Stanley said.

“I don’t think Tencent will continue falling for long. Such corrections are very normal,” Tsui said.

Among other technology companies, AAC Technologies, which supplies acoustic components for Apple’s iPhones, slid 1.86 per cent to HK$153.40. Selfie touch-up app maker Meitu fell 0.53 per cent to HK$11.26. Sunny Optical Technology, China’s largest manufacturer of smartphone camera modules and lenses, however, rebounded from a 6.07 per cent slump on Thursday, rising 1.54 per cent to HK$132.

In the financial sector, Bank of East Asia fell 0.87 per cent to HK$34.25, HSBC was down 0.13 per cent to HK$77.90 and Standard Chartered Bank slid 0.38 per cent at HK$77.70.

Ping An Insurance fell 1.95 per cent to HK$75.50. The Chinese insurer dropped 9.85 per cent this week, the largest weekly drop since January 2016. AIA fell 0.16 per cent to HK$63.20, while Manulife added 0.49 per cent to HK$164.50.

Geely Automobile rose 1.1 per cent to HK$27.50 after Nomura lifted the target price of the Chinese car manufacturer to HK$34.20 from HK$31.30, and forecast earnings per share to grow between 3 to 9 per cent through 2019.

I don’t think Tencent will continue falling for long. Such corrections are very normal
Gordon Tsui, Hantec Pacific

Several Chinese developers were chosen as Citigroup’s top stock picks on expectations that sales growth for the companies would rise to 30 per cent in 2018. Among the selection, Country Garden climbed 4.72 per cent to HK$12.88, Longfor Properties rose 0.55 per cent to HK$18.44, China Jinmao gained 0.57 per cent to HK$3.55 and Guangzhou R&F Properties advanced 3.59 per cent to HK$17.30.

In mainland China, the CSI 300 Index – which tracks large caps listed in Shanghai and Shenzhen – fell 0.2 per cent, or 7.96 points, to 3,998.14. The Shanghai Composite Index, however, rebounded from losses earlier in the day, edging up 0.01 per cent, or 0.429 points, to 3,317.62.

The Shenzhen Composite Index advanced 0.79 per cent, or 14.94 points, to 1,916.80 and the Nasdaq-style ChiNext rose 1.94 per cent, or 34.32 points, to 1,804.62.

The private Caixin/Markit China manufacturing purchasing manager’s index (PMI) eased to 50.8 in November, the weakest pace in five months. It was down from 51.0 in October, but roughly in line with economists’ expectations for a slight drop to 50.9.

The Caixin report contrasted with the official PMI survey released on Thursday that showed an unexpected pickup in manufacturing growth last month, despite the expected drag from the air pollution crackdown and a cooling property market.

Other Asian markets mostly ended higher on Friday. Japan’s Nikkei 225 gained 0.41 per cent to 22,819.03 after the 83-year-old Emperor Akihito announced that he will abdicate in April 2019. The Australian All Ordinaries added 0.29 per cent, while South Korea’s Kospi rose 0.04 per cent.