The Hang Seng Index tumbled 2.2 per cent to 16,499.47 at close on Friday, for a 1.3 per cent weekly loss. The single-day decline was the steepest since March 5. The Hang Seng Tech Index slumped 3.6 per cent and the Shanghai Composite Index retreated 1 per cent.
Losses on stocks intensified, as the yuan weakened to below 7.2 per US dollar, a level not seen since November, after China’s central bank lowered the daily reference rate. Some traders say the move reflects Beijing’s intention to let its currency depreciate after an unexpected drop in the Japanese yen, which could undermine the competitiveness of Chinese exporters.
“Weak earnings and earnings miss will now amplify the volatility particularly at a time when the pressure for profit-taking is increasing,” said Wu Kan, an investment manager at Soochow Securities in Shanghai. “Earnings strength is what investors best hope for to underpin the market now. But given the published results, and the macro picture, corporate earnings will mostly be sluggish and serve as no catalyst for the market.”
Sluggish earnings could further derail the rebound in the Hang Seng Index, which has risen 10 per cent from a January low through Friday. The recovery was supported by state-led buying and a pledge by the Chinese securities regulator to boost the quality of listed companies.
Net income for Ping An, China’s largest insurer by market capitalisation that has a 2.2 per cent weighting in the Hang Seng Index, dropped 23 per cent in 2023 from a year ago as weakness in its asset management and technology businesses offset buoyant insurance revenues.
Nomura analysts said in a note the company’s operating profit after tax fell 20 per cent year on year and its net profit decreased 23 per cent, both below estimates, mainly due to a loss of 20.7 billion yuan in its asset management business in 2023. Citigroup analysts cut its 2024 and 2025 earnings forecasts and lowered the share price target.
CNOOC, China’s biggest offshore oil producer, weakened 2.7 per cent to HK$17.72, shipping lines Orient Overseas plummeted 17 per cent to HK$99.70 and property developer Longfor Group Holdings shed 4.1 per cent to HK$10.18 after the trio posted full-year profits that trailed analysts’ estimates. All are components of the Hang Seng Index.
Some 26 companies on the benchmark are due to report full-year results next week.
Elsewhere, luggage case maker Samsonite International sank 7.2 per cent to HK$28.50 after saying that it plans a secondary listing, dashing hopes of investors who had expected the company to go private – a move which would have led to a share buy-back.
Other major Asian markets were broadly weaker. South Korea’s Kospi and Australia’s S&P/ASX 200 both lost 0.2 per cent but Japan’s Nikkei 225 climbed 0.2 per cent.