Hong Kong stocks break 4-day rising streak on tepid earnings, China deflation jitters
Wharf Real Estate Investment and SMIC slump on disappointing results, while China’s producer prices may have dropped for 34th month in July
The Hang Seng Index fell 0.9 per cent to 24,858.82 at the close on Friday. Still, the benchmark eked out a 1.4 per cent gain for the week on bets that the Federal Reserve will cut interest rates on the back of the softening data on the labour market.
The Hang Seng Tech Index dropped 1.6 per cent. On the mainland, the CSI 300 Index and the Shanghai Composite Index rose at least 0.1 per cent.
Chinese chipmaker Semiconductor Manufacturing International Corp tumbled 8.2 per cent to HK$48.66 after net income for the second quarter fell short of analysts’ estimates. Hong Kong property developer Wharf Real Estate Investment slumped 8.1 per cent to HK$23.62 after first-half operating profit fell 5 per cent from a year ago. Alibaba Group Holding dropped 2.4 per cent to HK$116.30 and Tencent Holdings slipped 1.1 per cent to HK$561.
Data on China’s consumer and producer prices, due on Saturday, will be in focus, as deflation is seen as a key headwind for China’s economy. Factory-gate prices probably fell 3.3 per cent from a year ago for a 34th straight month in July, and consumer prices may have dropped 0.1 per cent, according to a projection by economists polled by Bloomberg.
“Prices are running at low levels, and as a result, industrial companies’ profits have also been languishing,” said Wei Wei, an analyst at Ping An Securities.
A 26 per cent gain in the Hang Seng Index from an April low will be put to the test now, as China is set to release July economic data on credit supply, retail sales, investments and property prices. Investors have shifted attention to big-picture economic strength as tariff worries fade while they see no stimulus measures on the horizon from Beijing.