Hong Kong stocks slip on Alibaba’s earnings miss while China’s deepening deflation spook investors

Hong Kong stocks slip on Alibaba’s earnings miss while China’s deepening deflation spook investors

08 Feb Hong Kong stocks slip on Alibaba’s earnings miss while China’s deepening deflation spook investors

Posted at 03:00h in Asia by

Hong Kong stocks fell for a second day from a three-week high after Alibaba Group’s earnings report card trailed market expectations. A new government report showed deflation in China’s consumer and producer prices deepened into the new year.

The Hang Seng Index declined 0.3 per cent to 16,030.99 at 9.53am local time, trimming this week’s rally to 3 per cent. The Tech Index climbed 0.4 per cent and the Shanghai Composite Index added 0.3 per cent.

Alibaba Group tumbled 5.1 per cent to HK$71 after both earnings and revenue in the December quarter fell short of market consensus. Its e-commerce JD.com slipped 0.9 per cent to HK$89.55. Tencent lost 0.6 per cent to HK$291. WuXi Biologics tumbled 5.6 per cent to HK$18.08, giving up some of the surge on Wednesday.

Alibaba, the owner of this newspaper, weakened in tandem with the slump in its New York-listed shares, after revenue grew slower than expected 5.1 per cent, and earnings sank 69 per cent from a year earlier. The stock has lost almost a quarter of its market value over the past six months amid stiffer competition and regulatory hurdles. It separately boosted its stock buy-back war chest to US$35.3 billion through 2027.

Meanwhile, consumer prices in mainland China dropped at an annual rate of 0.8 per in January, a fourth straight month of decline, the statistics bureau said on Thursday. That is deeper than market forecasts for a 0.5 per cent drop. Producer prices weakened 2.5 per cent, a 16th straight month of contraction, it said.

Stocks appear to lose momentum soon after a midweek rally fuelled by hopes the Chinese government will step up market intervention to stem a market rout that has snowballed to US$5 trillion since the start of 2021, when the nation’s post-Covid recovery ran out of gas.

China appoints new securities chief to head off stock market slump

The government installed Wu Qing as the new head of the China Securities Regulatory Commission on late Wednesday, following measures to curb securities lending, short selling and other market stabilisation moves. The nation’s sovereign wealth fund had also intervened to stabilise the local financial markets.

Two companies started trading for the first time. Wafer Works Shanghai slumped 17 per cent to 18.80 yuan in Shanghai, while electronic parts maker Xian Novastar Tech surged 213 per cent to 396.02 yuan in Shenzhen.

Other major Asian markets were mixed. Japan’s Nikkei 225 slipped 0.1 per cent, while South Korea’s Kospi and Australia’s S&P/ASX 200 both gained 0.5 per cent.

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