August 16, 2018 – Hong Kong shares fell for a fifth straight day today, weighed down by losses for Tencent Holdings after the heavyweight internet services major reported an unexpected drop in second-quarter net profit.
The Hang Seng Index fell 0.8% to 27,100.06, a one-year low, with heavyweight Tencent also sliding for a fifth day. The stock lost 3%, contributing about a third of the gauge’s losses by points, after its quarterly net profit fell 2% amid surging costs and a slowdown in mobile gaming revenue growth, even as revenue increased 30%.
Tencent shares have slumped 11.9% this week as multiple negative surprises came to light, including its withdrawal of a recently launched game from its WeGame platform and a freeze on approvals for game licenses by Chinese regulators.
Markets in the rest of Asia traded lower, with the Nikkei Asia300 Index declining 0.7%, as capital outflows remained a worry. Strength in the dollar, coupled with worries over a financial crisis in Turkey and lingering Sino-American trade woes, have increased chances of a capital flight from risk assets. The dollar index, which measures the greenback against a basket of major currencies, hovered near 13-month highs.
“Investors now have a little hope that trade delegates from China and the U.S. will have another round of negotiations,” said Jason Lee, vice president for stocks at Hong Kong investment consultancy Investment Strategy Institute. “The Hang Seng Index may test the next support level of 26,000 in the second half of August as trade war fears aren’t over and people are still hesitant to put money in the market.”
Lee said that with the turmoil in Turkey, investors should watch the yuan’s levels closely to see if it breaches the key support level of seven to the dollar. The yuan traded onshore was last up 0.6% at 6.8946 against the dollar, after falling to a 15-month low on Wednesday. The benchmark Shanghai Composite ended down 0.7%.
Energy producers declined in Hong Kong after Brent crude prices retreated 2.3% overnight. PetroChina and China Petroleum & Chemical (Sinopec), lost 1% and 1.9%, respectively.
Personal-computer maker Lenovo Group rose 3.4% after returning to a profit of $77 million for the first quarter, compared with a year-ago loss of $72 million. Revenue increased 19% to $11.91 billion.
Pork producer WH Group slumped 7.5%. A spokeswoman for its subsidiary Shuanghui Group said the unit will shut down its Zhengzhou slaughterhouse in eastern China for six weeks after a pig was found to be infected with African swine fever.
Property developer CIFI Holdings advanced 4.4% following a 58.6% jump in first-half net profit to 3.42 billion yuan while revenue increased 64%.
Aircraft leasing company BOC Aviation added 4.5% after reporting a 24% increase in first-half net profit and a 23% climb in revenue for the period.
Power equipment maker Techtronic Industries jumped 10.7% following a 24.6% jump in net profit for the six months ended June 30.