Hong Kong stocks dropped from a two-week high as markets reopened after a three-day trading pause, with technology stocks coming under pressure amid softer corporate earnings outlook.
The Hang Seng Index lost 0.9 per cent to 28,674.80 on Wednesday. The index jumped 2.1 per cent last week to the highest level since March 19. The Shanghai Composite Index lost 0.1 per cent to 3,479.63.
The Hang Seng Tech Index retreated 1.4 per cent, with heavyweight Tencent Holdings sliding 3.7 per cent to HK$629.50. Alibaba Health fell 3.2 per cent to HK$22.40. JD.com declined 3.5 per cent to HK$324.40 after its subsidiary JD Digits withdrew its application for a stock on Shanghai’s Star market.
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“Some investors are hesitant about re-entering the market now” after a recent surge, said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai. A sluggish momentum in mainland China markets has affected sentiment in Hong Kong, with the inflow southbound funds also impacted, he added.
Mainland investors pulled HK$12.7 billion (US$1.63 billion) in March from Hong Kong stocks through the southbound channel of the Stock Connect programme. That was the first monthly outflow since February 2019, according to exchange data.
About one-third of the 1,500-plus members of the Shanghai Composite Index have published their annual reports through April 6, with earnings trailing analysts’ estimates by 14 per cent, according to Bloomberg data. Profits fell by an average 8 per cent from a year earlier. Chinese stocks dominate listings in Hong Kong.
“When China’s A shares are hovering around 3,400 points and the sentiment in Hong Kong is not that positive, it will be relatively hard for southbound funds to be so pumped up like in January and February,” Wen added.
Meanwhile, COSCO Shipping surged by 29.1 per cent in Hong Kong to HK$13.66 and rose by the daily limit of 10 per cent to 16.15 yuan in Shanghai. The shipper expects earnings to jump 520 per cent to 15.45 billion yuan (US$2.36 billion) in the first quarter of 2021, according to an exchange filing.
Optimism on COSCO have spread to other shipping stocks on mainland exchanges. COSCO Shipping Development and Ningbo Marine advanced by 10 per cent.
US stocks closed lower in overnight trading after major indices reached new record-highs amid optimism from stimulus spending promoted by the Biden administration and the outlook for faster economic recovery.
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