Hong Kong stocks slip from nearly a one-month high, after Tencent sees biggest drop in a week amid further scrutiny

·3-min read

Hong Kong stocks slipped on Thursday from their highest level in nearly a month, with technology giant Tencent Holdings dragging the benchmark lower amid concerns that mainland Chinese regulators were ramping up a crackdown on fintech companies.

The Hang Seng Index slipped 0.2 per cent to 29,113.20, after rising for two consecutive days to its highest level since April 29. On the mainland, the Shanghai Composite Index added 0.4 per cent to 3,608.85 for a fourth straight day of gains. The gauge also reached its highest level since February 23.

The Hang Seng Index had reached a technical resistance level since February, implying a high chance of a correction, analysts at CSOP Asset Management said in a note on Wednesday. “The market speculates there might be another round of capital [switching] between traditional and tech sectors,” the CSOP analysts said in the note.

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Meanwhile, the yuan rose to its strongest level since 2016 versus a basket of its peers. A rally in the Chinese currency gathered pace on Thursday, with the yuan rising 0.22 per cent versus a group of 24 exchange rates to 97.9819, surpassing its previous peak from 2018, according to data compiled by Bloomberg. Against the dollar, the Chinese currency was up 0.2 per cent to 6.3795 in the afternoon on Thursday.

Tencent was among the worst performing blue chips in Hong Kong, falling 2 per cent to HK$605.50, its biggest drop in a week. The e-commerce giant was told by regulators to put its finance related business into a new financial holding company, where it can be better supervised, according to a Caixin report. Tencent has the second highest weighting of 9.2 per cent on the benchmark Hang Seng Index, behind AIA.

“There are still lingering concerns about heightened regulatory scrutiny, so the markets remain a bit cautious,” said Stanley Chan, director of research at Emperor Securities.

Meituan fell 2.8 per cent to HK$271.80. The on-demand service platform will release its first-quarter results for the year on Friday.

Elsewhere, smartphone maker Xiaomi added 3.2 per cent to HK$29.05, its highest level since February 19. The Beijing-based company reported that its first-quarter net profit grew 260.6 per cent – beating estimates – on the back of increased sales worldwide, according to a filing after the market close on Wednesday.

Shares of Next Digital, the company that owns the Apple Daily newspaper, soared 50.5 per cent to HK$0.28 on Thursday for their biggest single-day gain since August 11, after trading resumed. The company had requested a suspension, which lasted 10 days, after the Security Bureau froze about HK$500 million (US$64.4 million) of controlling shareholder Jimmy Lai Chee-ying’s assets, including his Next Digital shares.

Wynn Macau fell 1.5 per cent to HK$13.42. Casino mogul Steve Wynn may face action from the US justice department for his alleged effort in 2017 to convince US officials to send fugitive tycoon Guo Wengui back to China, The Wall Street Journal reported.

On the mainland, liquor distiller Kweichow Moutai rose 1.1 per cent to 2,245 yuan, while Eastroc Beverage Group rose 44 per cent to 66.63 yuan from its listing price of 46.27 yuan in Shanghai.

Markets in Asia-Pacific were mixed. Japan’s Nikkei 225 fell 0.3 per cent, while South Korea’s Kospi slipped 0.1 per cent. Australia’s S&P/ASX 200 was little changed.

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