HK and China stocks edge lower led by Xiaomi and smartphone suppliers

18-Jan-2019 Intellasia | South China Morning Post | 6:00 AM Print This Post

Hong Kong and China stocks edged lower in Wednesday trading, as a slide in smartphone maker Xiaomi and component suppliers knocked the wind out of a strong rally on Tuesday driven by China’s signals for fresh stimulus.

The Hang Seng Index dipped 0.3 per cent, or 66.71 points, to 26,763.58 by the midday break. The Shanghai Composite Index was down 0.1 per cent, or 1.47 points, at 2,568.88. On Tuesday, the benchmarks jumped 2 per cent and 1.4 per cent, respectively.

Chinese smartphone and home appliances maker Xiaomi led the decline, falling 2.4 per cent to HK$9.72, on the back of a Bloomberg report that an investor sold 231 million class B shares at HK$9.45 per share.

Hong Kong and China stocks edged lower in Wednesday trading, as a slide in smartphone maker Xiaomi and component suppliers knocked the wind out of a strong rally on Tuesday driven by China’s signals for fresh stimulus.

The Hang Seng Index dipped 0.3 per cent, or 66.71 points, to 26,763.58 by the midday break. The Shanghai Composite Index was down 0.1 per cent, or 1.47 points, at 2,568.88. On Tuesday, the benchmarks jumped 2 per cent and 1.4 per cent, respectively.

Chinese smartphone and home appliances maker Xiaomi led the decline, falling 2.4 per cent to HK$9.72, on the back of a Bloomberg report that an investor sold 231 million class B shares at HK$9.45 per share.

Q Technology, a smartphone camera module maker that supplies Xiaomi, plummeted 6.7 per cent, after issuing a warning that its net profit may have plunged by 95 per cent in the last year because of a combination of factors, including slow upgrading of products and yuan depreciation.

Other smartphone component suppliers took a beating too, amid worrying signs including Apple’s recent blaming of China for slower sales growth. AAC Technologies fell 2.5 per cent and Sunny Optical declined 2.7 per cent.

“There’s no need to look at the smartphone and smartphone component sector anymore. New functions are unlikely to come out before 5G is introduced in 2020, so sales won’t be good,” said Castor Pang Wai-sun, Core Pacific-Yamaichi’s head of research.

“Valuations of the suppliers were pushed up too high previously and now investors are pounding them given the profit warning,” he said.

Mainland Chinese developers first dipped and then jumped up after the latest official reading of China’s new home prices. It showed price growth diverged between bigger and smaller cities in December.

While new home prices grew faster in megacities such as Beijing which saw a 1 per cent rise in new home prices against 0.6 per cent in November price growth slowed or reversed into contraction among second- and third-tier cities like Nanjing and Xiamen.

Country Garden, which had the highest turnover, surged 2.2 per cent. Sunac China Holdings added 1.9 per cent and China Evergrande rose 0.7 per cent.

China’s central bank injected a record 560 billion yuan (US$83 billion) into the markets through reverse repo operations on Wednesday, the largest daily cash injection on record.

The move to boost liquidity comes three weeks ahead of the Lunar New Year, when cash demand traditionally surges. The central bank implied on Tuesday it would evaluate whether to cut interest rates after assessing the effect of current policies on shoring up the slowing economy.

New bank loans in December reached 1.08 trillion yuan in December, beating the projection of 800 billion yuan by analysts in a Reuters poll, according to data released on Tuesday.

A fresh round of stimulus promise including tax cuts from China’s top economic planning body and the finance ministry on Tuesday boosted markets from Hong Kong to New York.

https://sg.news.yahoo.com/hong-kong-china-stocks-edge-025532089.html

 


Category: FinanceAsia

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