Hong Kong stocks fall by the most in a week on concern earnings growth may slow this year

Ping An Insurance and carmaker Geely among the biggest losers as investors see them unable to maintain the strong rises in profit in 2017

PUBLISHED : Wednesday, 21 March, 2018, 9:08am
UPDATED : Wednesday, 21 March, 2018, 9:33pm

Hong Kong stocks dropped by the most in a week on Wednesday on concern corporate earnings growth may have peaked after Ping An Insurance Group and Geely Automobile Holdings posted big increases in full-year profit.

The Hang Seng Index fell 0.4 per cent, or 135.41 points, to 31,414.52, giving up early gains of as much as 1.4 per cent. The Hang Seng China Enterprises Index, or the H-share gauge, retreated 0.6 per cent.

“There’s a sell-on-good-news play in Hong Kong’s market,” said Wang Chen, a partner with Xufunds Investment Management in Shanghai. “Investors are starting to worry whether these companies will be able to maintain such high profit growth rates this year, given the much higher base last year. They feel that there’s a big possibility that growth will slow down this year.”

Ping An Insurance slid 3.2 per cent to HK$88.30. The insurer said late on Tuesday that net income increased 43 per cent to 89.1 billion yuan (US$14.1 billion) last year. That exceeded the estimate of 76.3 billion yuan in a survey of analysts polled by Bloomberg. Its Shanghai-traded stock slipped 0.4 per cent to 73.82 yuan.

Geely Auto tumbled 6.2 per cent to HK$25.80, its biggest decline since February 6. The carmaker said during the noon market break on Wednesday that full-year profit jumped 108 per cent to 10.6 billion yuan in 2017, surpassing the projection of 9.9 billion yuan in a Bloomberg survey.

The two stocks accounted for almost 60 per cent of the loss on the Hang Seng Index on Wednesday.

Tencent Holdings fell 0.9 per cent to HK$462.60. The technology giant reported profit of 71.5 billion yuan, compared with the estimate of 67.2 billion yuan, after the close of Wednesday trading.

ZhongAn Online P&C Insurance slid 6 per cent to HK$64.50. The online insurer posted a net loss of 997.3 million yuan for 2017.

Almost 60 per cent of the constituent companies on the Hang Seng Index have released annual earnings reports. Among them, results beat analysts’ estimates by 8.1 per cent, according to Bloomberg data.

Energy producers bucked the downward trend after crude oil futures rose to the highest level in more than three weeks. PetroChina, the nation’s biggest oil producer, gained 2.4 per cent to HK$5.47 yuan and CNOOC added 1.9 per cent to HK$11.64.

Market sentiment also remained cautious ahead of the conclusion of a two-day policy board meeting of the Federal Reserve. The chance is 80 per cent that the US central bank will raise benchmark interest rates by 25 basis points, according to Bloomberg data. Market participants expect a total of three rate increases this year, although some have not ruled out the possibility of four.

In mainland China, the Shanghai Composite Index fell 0.3 per cent, or 9.69 points, to 3,280.95. The ChiNext gauge of smaller companies slumped 1.9 per cent for the biggest decline since February 9, as profit-taking weighed on what had been the best performer among mainland China’s stock markets this year.