Hong Kong stocks fell to a one-week low, joining a sharp global equity sell-off prompted by concerns over rising coronavirus infections and the US election outcome. China stocks defied the gloom with bright earnings scorecard.
The Hang Seng Index slumped by as much as 1.8 per cent in early trading before trimming the decline to 0.5 per cent at 24,586.60 at the close. Gains in some technology stocks helped pare the losses.
The Shanghai Composite Index was little changed at 3,272.73, after earlier tumbling as much as 1.2 per cent. The Shenzhen Component Index rose 1 per cent, and the CSI 300, which tracks the largest companies in Shanghai and Shenzhen, increased 0.8 per cent.
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
Other major gauges in Asia retreated. South Korea’s Kospi index fell 0.8 per cent, while Japan’s Nikkei 225 declined 0.4 per cent. Australia’s S&P/ASX 200 Index lost 1.6 per cent. They fell after the biggest sell-off on Wall Street in more than four months, amid heightened concerns about Covid-19 infections and the US presidential election outcome.
“Market sentiment is turning with investors buffeted by US election uncertainty and now economic worries from rising Covid-19 cases across Europe, sparking concerns that measures to control the virus will hamper economic activity,” said Kerry Craig, global market strategist at JP Morgan Asset Management. “These short-term forces are well beyond the control of individual investors, underscoring the need to maintain balance through the immediate uncertainty.”
Accelerating Covid-19 cases in Europe prompted France to announce its second national lockdown till at least the end of November. In the US, a new spike in infections in states such as Wisconsin pushed coronavirus-related deaths to levels not seen since the summer outbreak.
“Global markets trembled Wednesday as a disquieting rise in coronavirus infections shattered investors‘ psyche and now pose a clear and present danger to a nestling economic recovery,” said Stephen Innes, chief global market strategist at Axi.
Financial stocks weighed on the Hang Seng Index, as investors exited the sector after a rally over the past two weeks built on optimism over their third-quarter earnings. A spate of financial companies are set to release the results after market close on Thursday or on Friday, including China’s four biggest state-controlled banks.
AIA Group, the second-most weighted stock in the Hang Seng Index, declined 1.3 per cent to HK$75.60, contributing to a 31-point loss in the benchmark. Ping An Insurance (Group), China’s largest by market value, plummeted 1.8 per cent to HK$80.50. HSBC fell 1.1 per cent to HK$32.30, and China Construction Bank dropped 0.7 per cent to HK$5.49.
Technology stocks recouped early losses as sentiment improved over their growth outlook. Meituan Dianping, China’s online food delivery giant, jumped 6.1 per cent to close at an all-time high of HK$297.20. Credit Suisse on Thursday lifted its target price to HK$310 from HK$300.
Tencent Holdings also reversed losses to rise 0.7 per cent to a record high of HK$605. Alibaba Group, the owner of this newspaper, slipped 1.6 per cent to HK$302.60.
In China, consumer stocks led the rebound in China’s onshore market. Liquor distillers surged, after upbeat third-quarter earnings reports from producers shored up confidence in the recently beaten-down sector. Carmakers and home appliance producers also soared on positive retail data.
“Consumer and technology are still the most attractive categories in the long term, even though their valuations have climbed over the past few years. Investors are taking advantage of the recent correction to buy in,” said Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management.
A review of changes in mutual funds’ third-quarter allocation in China stocks by Guosen Securities shows an inflow into consumer sectors, with the share of food and beverage stocks in their overall portfolios rising by 2.3 per cent, according to a report on Thursday. Meanwhile, funds exited the pharmaceuticals and technology sectors.
Luzhou Laojiao Group, which produces white liquor known or the local fiery baijiu, jumped by the maximum 10 per cent limit to 178.97 yuan after beating market expectations with a 53 per cent surge in third-quarter net profit. Kweichow Moutai, the world’s most valuable liquor producer by market capitalisation, rose 0.7 per cent to 1,676 yuan.
Carmaker Jiangling Motors soared by the 10 per cent limit for the second straight day to 18.73 yuan, while electric vehicle giant BYD also climbed 4.5 per cent to 158.38 yuan. China’s average daily car sales grew 17 per cent to 45,000 units in October from the same period last year, data from China Passenger Car Association.
About 65 per cent of the more than 2,300 Chinese firms that have announced third-quarter earnings so far as of early Thursday showed improvement from a year earlier, according to Bloomberg-compiled data. That puts the period in line for the highest ratio of third-quarter earnings improvement since 2016.
Some 968 companies, including China Construction Bank, are due to release their report cards on Thursday, making it the busiest day of the earnings season.
Ninebot’s Chinese depositary receipts, China’s newest type of instrument, more than doubled on the Star Market on their debut. They ended 103.3 per cent higher at 38.5 yuan.
More from South China Morning Post: