Ping An, Meituan drag Hang Seng Index to 3-month low as poor earnings season, recession fears overcome China bets

On Aug 23, 2022 32

Stock index level is shown outside an HSBC bank branch in Hong Kong. Photo: SCMP

US equities slipped overnight by the most since mid-June on Fed policy concerns, hurting risk appetite in Asian markets
Reported earnings from Hang Seng Index companies have so far trailed market consensus by 11 per cent, according to Refinitiv data

Hong Kong stocks slipped to the lowest level in more than three months, tracking overnight losses in US equities, while markets struggled with uninspiring domestic corporate earnings.

The Hang Seng Index fell 0.5 per cent to 19,560.55 at the local noon trading break, a level not seen since May 12. The Tech Index was unchanged and the Shanghai Composite Index added 0.2 per cent.

Companies slated to report their earnings on Tuesday weakened, with Ping An Insurance dropping 1.5 per cent to HK$42.85 and Henderson Land retreating 0.5 per cent to HK$27.55. Meituan fell 0.4 per cent to HK$170.40 while Li Ning slumped 1.6 per cent to HK$69.65 and Sunny Optical lost 2.8 per cent to HK$109.20.

About 40 per cent of the Hang Seng Index members have reported earnings so far, missing analysts’ estimates by 11 per cent, according to Refinitiv data. Some 28 per cent of all Chinese listed stocks have reported their interim results through August 19, falling 1 per cent from a year earlier on average, according to Goldman Sachs.

“We believe the upside in China and Hong Kong stock markets is limited in the short term, due to the overhang in China’s property market,” said Daniel So, analyst at CMB International. A resurcence in Covid-19 cases and poor US-China ties are also hurting the market, he added.

Three cuts to key lending rates in China this year have failed to spark buying interest, as some money managers called for a strong dose of stimulus to recharge the economy hobbled by a housing market slump.

Asian markets also weakened, with benchmarks in Australia, South Korea and Japan losing by 1 per cent to 1.2 per cent. The S&P 500 tumbled 2.1 per cent on Monday, the most since mid-June, amid concerns that higher US interest rates will push the economy into a recession.

The Federal Reserve has raised its federal funds target rate by 225 basis points in four meetings this year to overcome inflation. Fed officials are due to speak this week at the annual Jackson Hole economic symposium, keeping risk-taking at bay.

Dioo Microcircuits Co jumped 20 per cent to 50 yuan on its first day of trading in Shanghai, the only debutant on Tuesday.

Author: Cheryl Heng, SCMP