Hong Kong stocks retreat as China counts economic pain amid stimulus calls while Alibaba, Baidu slip before earnings
- Premier Li Keqiang says the Chinese economy in some aspects is in worse shape than when the pandemic first hit the nation in 2020
- Alibaba and Baidu weaken before reporting their latest quarterly results as tech sector struggles to sustain a rebound from Wednesday
Hong Kong stocks fell, led by Meituan and JD.com, as top Chinese officials detailed steep economic losses from Covid-19 lockdowns while calling for greater efforts to shore up growth. Alibaba Group Holding and Baidu slid before their earnings reports.
The Hang Seng Index dropped 1 per cent to 19,962.35 as of 2pm local time, while the Tech Index wavered before losing 1 per cent. The Shanghai Composite Index added 0.3 per cent. Benchmarks in South Korea, Japan and Australia fell by 0.3 to 0.7 per cent.
Alibaba, the owner of this newspaper, dropped 2.6 per cent to HK$80.20. Meituan fell 2.6 per cent to HK$155.50 while JD.com weakened 1.8 per cent to HK$195. Mengniu Dairy and Anta Sports retreated at least 1 per cent, as lockdowns and worries about job losses blunt consumer spending.
Stocks struggled to sustain a rebound from Wednesday. A series of lockdowns since March that shuttered factories and upended supply chains. Premier Li Keqiang unveiled a new round of 33 growth measures on Monday and called for swift actions on Wednesday to restore growth and stem job losses.
“The government is clearly panicking and has been stepping up policy easing with increasing urgency,” Xiaocen Wang, an analyst at Alpine Macro wrote in a report on May 26. “Their efficacy and impact are constrained by the rolling lockdowns that have paralysed activity.”
Economic indicators have deteriorated significantly, Beijing officials said, and “the current situations in some areas to a certain extent are worse than when the pandemic hit the nation in 2020,” Li said in a speech during a multi-agency teleconference on Wednesday.
Officials from China’s top economic planning agency said it would strengthen infrastructure construction and stabilise supply chains, according to a transcript from the call. The finance ministry said it would accelerate the issuance of local government bonds to raise funding, while the central bank pledged to maintain liquidity at a reasonable and sufficient level.
Investors remained cautious ahead of major earnings reports. Alibaba is expected to make 10.5 billion yuan in earnings for the March quarter, a swing from loss last year, according to Bloomberg data. Search engine operator Baidu fell 0.9 per cent to HK$114.50. It is poised to report a 99 per cent slump in net earnings from the year before.
About 86 per cent of all Chinese onshore and offshore firms have reported their earnings for the March quarter through May 20, according to data compiled by Goldman Sachs. Earnings rose an average of 2 per cent, versus consensus estimates of 9 per cent for MSCI China Index, the US bank said.
Shenzhen Phoenix Telecom Technology soared 36 per cent on its first day of trading, while Shenzhen Kiwi Instruments Corp jumped 17 per cent.
Author: Cheryl Heng, SCMP