Hong Kong stocks slumped 373 points as traders struggled to find catalysts ahead of a July meeting of China’s top leaders, adding to concerns about a slowdown in industrial profits for Chinese companies.
The Hang Seng Index declined to 17,716 points yesterday, a two-month low. The technology gauge fell by 2.7 percent. The mainboard turnover amounted to HK$104.2 billion.
Investors reduced their risk exposures ahead of the Third Plenum, which usually showed shifts in economic policy, while recent policies failed to provide a strong boost to the market.
Moreover, the slowdown in industrial profit growth has raised concerns about the earnings performance of Chinese companies as the country’s weak domestic demand crimps overall growth.
China’s industrial profits rose 0.7 percent last month, a sharply slower pace compared to the previous month, official data showed yesterday. In April, it recorded a 4 percent increase.
Technology stocks generally declined. Xiaomi (1810) tumbled 7.2 percent to HK$16.54 despite a new product launch. Tencent (0700) fell 2 percent, and Meituan (3690) fell nearly 2.8 percent.
Nongfu Spring (9633) dropped 7.4 percent, making it the worst-performing blue-chip share as mainland media reported that a price war erupted in the purified water market.
Against the market, the three major Chinese telecom stocks rose. China Mobile (0941) gained 0.6 percent, China Unicom (0762) increased by over 1 percent and reached a 52-week high, and China Telecom (0728) rose nearly 3 percent.
It came as Citi maintains its target of 19,800 points for the Hang Seng Index by the end of this year, optimistic about Chinese stocks that benefit from policies or have strong earnings performance, including tech stocks, high-dividend Chinese banks, and telecom stocks.
Meanwhile, China’s onshore yuan closed at 7.2689 yuan against the US dollar, down 23 points, an almost eight-month low.
Hong Kong United Times丨香港聯合時報丨HKUT 