Hong Kong stocks drop for second day as traders await corporate earnings from Baidu, NetEase Li Auto to back up sentiment-driven rebound

The Hang Seng Index dropped 0.6 per cent to 16,622.81 at 11.21am local time, extending a retreat from a seven-week high. The Hang Seng Tech Index slipped 0.1 per cent while the Shanghai Composite Index lost 0.5 per cent.

Alibaba Group slipped 0.6 per cent to HK$74.10 and Tencent lost 1.6 per cent to HK$286.20. Baidu slid 1.8 per cent to HK$107.90, while online game operator NetEase retreated 0.7 per cent to HK$166.70. Tempering losses, EV maker Li Auto added 0.3 per cent to HK$139.50. Its report on Monday may show earnings tripled last quarter from a year earlier. Peer BYD rallied 2.4 per cent to HK$189.60.

Baidu and NetEase are also due to publish their report cards this week, as is the city’s bourse operator Hong Kong Exchanges and Clearing or HKEX, whose stock slipped 1.3 per cent to HK$249.80.

Baidu’s fourth-quarter earnings probably fell 3.2 per cent based on global accounting standards, while NetEase’s earnings are forecast to rise 79 per cent, according to consensus estimates by analysts tracked by Bloomberg, while HKEX’s earnings probably fell 8 per cent.

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The Hang Seng Index advanced 2.4 per cent last week after China’s securities regulator clamped down on “market disruption” caused by quantitative hedge funds, and tech stocks got a massive boost globally from AI chip maker Nvidia’s bullish revenue outlook.

“All these regulatory measures can stabilise the market and sentiment for now,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. “But for stocks to move onto a sustained uptrend, you’ll need to see the economy pick and corporate earnings return to strong growth.”

China’s annual legislative meeting, or the National People’s Congress, will be high up on traders’ radar screens next week. The political gathering, which is due to begin on March 5, will evaluate and reset the nation’s annual growth target, the fiscal deficit and economic policies.

Other major Asian markets were mixed. Japan’s Nikkei 225 climbed 0.5 per cent to a record high for a second day, while Australia’s S&P/ASX 200 was little changed and South Korea’s Kospi retreated 0.6 per cent.