Hong Kong stocks slide to 2-month low as Putin orders attack on Ukraine while Alibaba’s earnings seen disappointing

  • Putin orders Russian troops to demilitarise neighbour Ukraine while the US and its allies dish out more sanctions
  • Alibaba’s earnings likely dropped 60 per cent in the latest quarter, while other big guns like HKEX, NetEase and Budweiser prepare to issue their report cards

Hong Kong stocks fell to a two-month low as Chinese Big Tech slumped after Russia attacked Ukraine in a move to demilitarise its neighbour, stoking war in Europe. Concerns about weaker corporate earnings also hurt sentiment.

The Hang Seng Index retreated 3.1 per cent to 22,925.60 as of local noon trading break. The Tech Index tumbled 4.3 per cent, while the Shanghai Composite Index slipped 0.9 per cent.

Alibaba Group Holding, the owner of this newspaper, tanked 6.6 per cent to HK$105, sinking to its lowest ahead of its quarterly earnings on Thursday. Game developer NetEase, which also reports today, lost 5.1 per cent while Tencent Holdings and Meituan declined by more than 3.6 per cent.

President Vladimir Putin authorised a military operation in eastern Ukraine early Thursday in what could be the start of war in Europe over Russia’s demands for an end to NATO’s eastward expansion, Reuters reported.

“A period of sustained geopolitical tensions and volatility in financial markets could adversely affect corporate confidence, leading corporates to hold back on capex and hiring decisions, weighing on growth,” Morgan Stanley said in a note on Wednesday.

Major Asian markets declined. Australian shares slid 3.1 per cent while Japanese and Korean equities lost at least 1.1 per cent.

Alibaba’s earnings probably dropped 60 per cent, its fourth contraction in a row since China foiled the jumbo listing of its associate Ant Group in November 2020 and tightened the screw on internet-platform operators throughout last year.

“Don’t expect too much from Alibaba, given that its valuation has fallen [to its lowest],” said Francis Lun, chief executive of Geo Securities. “I worry that tech stocks won’t recover because of government and policy risks.”

The Hang Seng Index has dropped 2 per cent this year as geopolitical risks and regulatory concerns challenged bullish bets based on policy easing in mainland China and cheap valuations.

Bourse operator Hong Kong Exchanges & Clearing, Budweiser Brewing Company and Sun Hung Properties are also expected to unveil their report cards today.

Eleven of the 64 members in the Hang Seng Index have reported their latest earnings so far, missing analysts’ estimates by about 1.7 per cent on average, according to Bloomberg data.

Author: Cheryl Heng, SCMP

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