Hong Kong stocks fall from 2-week high on weak China outlook as Xpeng slumps

The Hang Seng Index fell 1 per cent to 16,620.23 at 11.08am local time, retreating from the highest since December 1. The Tech Index dropped 1.2 per cent while the Shanghai Composite Index retreated 0.1 per cent.

Xpeng tumbled 5.1 per cent to HK$56.30 after Alibaba Group disclosed a plan to sell 25 million American depositary shares in the EV maker. Sportswear maker Li Ning dropped 2.6 per cent to HK$18.50 while Tencent tumbled 1.3 per cent to HK$310.40 and Meituan slumped 1.7 per cent to HK$83.50. Biopharma firm Wuxi Apptec, which joined the Hang Seng Index on December 4, lost 2.9 per cent to HK$78.

The Hang Seng Index advanced 2.8 per cent last week for the biggest five-day gain since late July, aided by China’s new measures to spur housing demand in top-tier cities. The Federal Reserve also hinted at the end of its rate-hiking cycle, after its final policy meeting of the year.

Still, economic data this month showed China’s retail sales in November were weaker than economists predicted, while property investment stagnated. Sentiment soured after one Fed official said that it was too early for the US central bank to start thinking about cutting rates. The Fed holds its first 2024 rate-setting meeting on January 30-31.

“China’s latest economic data has no upside surprise and that means corporate earnings will continue to be sluggish or even slide,” said Mou Yiling, an analyst at Minsheng Securities. “Investors are also being too aggressive with bets on US rate cuts.”

SenseTime’s founder Tang Xiao’ou dies at age 55, AI company says

Elsewhere, China’s biggest AI software company SenseTime sank 10 per cent to HK$1.13. The company said its founder Tang Xiao’ou died on December 15 after succumbing to an undisclosed illness. His controlling stake of more than 20 per cent will remain under a lock-up agreement until December 2024.

Two companies started trading. REPT Battero Energy, a Chinese maker of lithium batteries, rose 3.8 per cent to HK$19 in Hong Kong. Shenzhen Ampron Technology, which makes pressure and temperature sensors, jumped 171 per cent to 90.10 yuan in Shenzhen.

Other major Asian markets weakened. Japan’s Nikkei 225 slipped 1.1 per cent and Australia’s S&P/ASX 200 lost 0.5 per cent, while South Korea’s Kospi added 0.3 per cent.