Hong Kong stocks slump as valuation gap evaporates; CK Hutch, CK Asset results disappoint

The blistering rally has nearly closed Chinese tech stocks’ valuation with the Magnificent Seven in the US

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The rally in Hong Kong stocks is showing signs of fatigue. Photo: Shutterstock

Published: 10:44am, 21 Mar 2025Updated: 4:31pm, 21 Mar 2025

Hong Kong stocks extended the biggest slide in three weeks on Friday, as the rally spurred by China’s advances in artificial intelligence took a pounding amid a narrowing gap with US tech shares and disappointing earnings from leading listed companies controlled by some of the city’s richest families.

The Hang Seng Index closed 2.2 per cent lower at 23,689.72, the lowest in a week and capping a 1.1 per cent loss for the week. The Hang Seng Tech Index slumped 3.4 per cent. On the mainland, the CSI 300 Index dropped 1.5 per cent and the Shanghai Composite Index slid 1.3 per cent.

CK Hutchison Holdings, the conglomerate controlled by the Li Ka-shing family, slumped 3.6 per cent to HK$43.25 after reporting a 27 per cent profit decline last year. Its affiliate CK Asset Holdings lost 5.8 per cent to HK$31.70 after annual net income dropped 21 per cent, while Henderson Land Development, which was founded by the late tycoon Lee Shau-kee, shed 1.7 per cent to HK$22.60 after posting a 32 per cent decrease in profit. Alibaba Group Holding sank 3.5 per cent to HK$130.70 and Tencent Holdings retreated 1.5 per cent to HK$511.50.

“Fundamentals are weak and there’s a lull in policy announcements,” said Qiu Hua, an analyst at Xiangcai Securities. “There will be a few earnings surprises during the results season due to China’s lacklustre economy in 2024. The market is likely to trade sideways until April.”

Hong Kong stocks’ world-beating rally is facing a flurry of headwinds. The rapid gains have prompted warning from BofA Securities, which said earlier this week that a “meaningful” pullback lies ahead, citing the results of an investors’ survey.

After a 26 per cent gain this year, the 30-member Hang Seng Tech Index trades at a 6.3 per cent discount to the US “Magnificent Seven” stocks on a valuation basis, compared with a 50 per cent gap in December, according to Bloomberg data.