Hang Seng Index decline deepens as dismal earnings outlook puts investors on edge

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Baidu’s 8.6 per cent slump makes it the benchmark’s worst performer; Alibaba falls 4.4 per cent

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A screen displays market data outside the Hong Kong stock exchange. Photo: EPA-EFE

Zhang Shidongin Shanghai

Published: 10:26am, 22 Nov 2024Updated: 4:31pm, 22 Nov 2024

Hong Kong stocks fell, with the benchmark flipping to a weekly loss, as disappointing results from Baidu and downbeat guidance from PDD Holdings heightened jitters about corporate earnings and China’s growth outlook.

The Hang Seng Index closed 1.9 per cent lower at 19,229.97, taking the loss to 1 per cent for the week. Only seven of the 82 index stocks rose. The Hang Seng Tech Index slumped 2.6 per cent.

Mainland’s benchmarks declined. The CSI 300 Index and the Shanghai Composite Index both retreated 3.1 per cent.

Chinese search engine operator Baidu tumbled, the worst performer on the Hang Seng Index after reporting the biggest sales decline in more than two years. Alibaba Group Holding dropped after rival PDD warned of stiffer competition in the e-commerce industry.

A slew of lacklustre results from Hang Seng Index companies, including Alibaba and Baidu, underscore the weakness in China’s economic recovery and the urgency for policymakers to do more to ramp up growth. Investors have become impatient and opted to exit equity markets after fiscal measures approved by lawmakers this month to sell bonds to tackle the hidden debt crisis at local governments fell short of market expectations.

“Equity markets could be bumpier in 2025 with a deflationary environment, persistent downwards earnings pressure and rising geopolitical concerns,” said Laura Wang, a strategist at Morgan Stanley in Hong Kong.