Xpeng, BYD skid as Hong Kong stocks rattled by wider Covid-19 lockdowns in China, earnings setback

  • Chinese property developers and electric-car makers lead the declines, as poor earnings and sales trigger a new bout of sell-offs
  • Other Asia markets mixed as traders await a US job report that could influence interest-rate decisions by the Federal Reserve

Hong Kong stocks fell, extending a weekly loss, as lockdowns in Shenzhen and Chengdu revived investor concerns about production curbs and damage to corporate earnings.

The Hang Seng Index declined 0.6 per cent to 19,475.78 at the noon break on Friday, set for the lowest close in a week. The index has lost 3.4 per cent this week. The Hang Seng Tech Index slipped 0.8 per cent, while the Shanghai Composite Index added 0.3 per cent.

Electric-car makers fell after reporting weaker than expected sales in August. Xpeng slid 4.1 per cent to HK$67.60, Li Auto dropped 2.3 per cent to HK$108.50, Nio lost 2.1 per cent to HK$147.20 and BYD fell 2 per cent to HK$228.

Chinese property developers also declined, as poor earnings reports triggered a new bout of sell-offs. Country Garden Holdings slumped 3.9 per cent to HK$2.22, China Resources Land lost 3.7 per cent to 31.15 yuan and China Overseas Land and Investment retreated 2.3 per cent to HK$20.95.

Key districts in Shenzhen, including Nanshan where many hi-tech companies are located, have been placed under semi-lockdowns for at least three days to contain the spread of Covid-19 infections. The southern tech hub reported 87 cases on Thursday, the highest daily case in about six months.

That coincided with the lockdown of Chengdu, the capital city of the southwest Sichuan province. The city, with a population of 21 million, went under confinement at 6pm on Thursday and all residents were required to take nucleic acid tests.

“Repeated lockdowns have hurt market sentiment,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai. “That has added to investors’ concerns about the outlook of the economy, which has already been battered by rising raw-material costs and shrinking demand. Such a scenario will continue to put corporate earnings at risk.”

Hong Kong’s daily coronavirus tally reached 10,586 infections on Thursday, the first time a five-digit figure had been logged in more than five months. The city is preparing to extend its vaccine pass programme to cover younger children and has secured preliminary backing from mainland authorities for a “reverse quarantine” scheme that would allow travellers to undergo isolation at designated facilities in the city first before heading across the border.

Four companies started trading on the mainland’s exchanges on Thursday. Shanghai OPM Biosciences jumped 59 per cent to 127.60 yuan in Shanghai and Shandong Xinjiufeng Technology Packaging surged 13 per cent to 20.49 yuan in Shenzhen. On the flip side, Focus Hotmelt dropped 9 per cent to 47.93 yuan in Shenzhen and Nanjing Liandi Information Systems lost 5.9 per cent to 7.53 in Beijing.

Other major markets in Asia were mixed, as Japan’s Nikkei fell 0.2 per cent, Australia’s benchmark slipped 0.1 per cent and South Korea’s Kospi gained 0.1 per cent. Sentiment was cautious, as traders were waiting for the US job report due on Friday that will offer more insight on the path to interest-rate increases by the Federal Reserve.

Author: Zhang Shidong, SCMP

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