Tencent, Alibaba, Meituan pace declines as Hong Kong stocks’ 3-day rally cut short on long-term China growth concerns

The Hang Seng Index declined 0.4 per cent to 16,150.47 at 10.50am local time, after rallying 8.4 per cent over the preceding three days. The Tech Index dropped 1.9 per cent, while the Shanghai Composite Index weakened 0.3 per cent.

Tencent eased 0.4 per cent to HK$289.60, Alibaba lost 1.4 per cent to HK$72.35 and Meituan dropped 2.2 per cent to HK$67.90. Electric-car maker BYD fell 2.3 per cent to HK$193.90, while rival Li Auto lost 2 per cent to HK$109.10.

The decline trimmed gains since last Friday to 5.6 per cent. Still, it’s the first winning week of 2024 and the best five-day period in more than six months, according to Bloomberg data. Before the rally, Hong Kong’s stock benchmark had the worst start to the year since 2016, slumping more than 12 per cent to a 15-month low.

“Investors usually need to see a sustained acceleration in China’s economic activity before its equities outperform,” Alejandra Grindal, chief economist at Ned Davis Research, said in a note to clients on Thursday. “Investors continue to have concerns about China’s long-term growth trajectory”, with consumption growth remaining sub-par and the property market weighing on spending and inflation, she added.

Foreign investors scooped up 10.5 billion yuan (US$1.5 billion) worth of mainland stocks this week up to Thursday, the first week of net buying this year and narrowing the year’s outflow to 20.8 billion yuan, according to Stock Connect data. Still, they have offloaded about US$30 billion worth of A shares over the past six months, the worst on record.

PC maker Lenovo tumbled 7.4 per cent to HK$9.50, the biggest retreat in nearly two months, after retired US general James Marks published an opinion piece in Newsweek, advocating for a legislation to ban the Chinese made computers on espionage concerns.

Xuchang Intelligent Relay, a manufacturer and distributor of power equipment, surged 74 per cent to 8 yuan per share on the first day of trading in Beijing.

Major key Asian markets were mixed. South Korea’s Kospi jumped 0.9 per cent, while Australia’s S&P/ASX 200 added 0.5 per cent. Japan’s Nikkei 225 lost 1.1 per cent.