HK stocks decline with Tencent’s profit worse than consensus

By China Daily: Hong Kong Edition

Hong Kong shares fell on Wednesday as the Hong Kong Monetary Authority’s move to defend its currency peg tempered investor’s appetite and downbeat economic data on the Chinese mainland as well as the yuan’s bearish performance also dented market confidence.

The blue chip Hang Seng Index (HSI) dropped 1.55 percent, or 429 points, to 27,323 points. The main board turnover was HK$111.4 billion.

The Hang Seng China Enterprises Index lost 1.95 percent, or 209 points, to close at 10,535 – with turnover of HK$36.63 billion.

HKMA bought HK $2.159 billion of local dollars during New York trading hours and on Wednesday purchased HK$2.355 billion again after the Hong Kong equity market’s closing. The purchase was the first in three months after the Hong Kong dollar dipped to the weak end of its trading band.

Mainland technology giant Tencent Holdings reported a profit attributable to equity holders of 41.2 billion yuan ($5.9 billion) for the first half of this year, less than market forecast, recording a 26-percent increase compared with last year, according to its interim earnings report.

Tencent fell 3.6 percent to HK $336 on Wednesday, contributing the most to the HSI’s decline.

The Shenzhen-based internet goliath, best known for its popular games and messaging services, has shed more than $150 billion in market value from the peak level recorded in January.

“HSI is possibly going downward to as low as 26,800 points,” said Patrick Shum Hing-hung, investment manager at Tengard Fund Management, who believes the mainland’s P2P (peer-to-peer) sector, troubled with a lending crisis, will elicit capital flowing back to the mainland, which is one of the main reasons why the local equity market has been coming under pressure recently.

Moreover, the combination of the US Federal Reserve’s rate hike and a weaker yuan also made many mainland companies’ heavy US dollar borrowings even more costly, added Shum.

This article provided by NewsEdge.