China, Hong Kong stocks drop as disappointing corporate earnings weigh

HONG KONG: China and Hong Kong stocks fell on Friday, as investors remained cautious amid US President-elect Donald Trump’s tariff threat, while disappointing corporate earnings also weighed on sentiment.

China, Hong Kong stocks rebound in choppy trade

• At the midday break, the Shanghai Composite index was down 0.99% at 3,336.93 points.

• China’s blue-chip CSI300 index was down 1.02%, with financials falling 1.25%, the consumer staples sector slipping 1.36%, the real-estate index edging 0.15% lower and the healthcare sub-index declining 1.68%.

• Morgan Stanley noted A-share sentiment dropped with declining volumes and accelerated downward earnings revisions. The bank expects sentiment to remain volatile as the country’s reflation path should remain bumpy amid sluggish housing investment and tariff impact.

• Chinese H-shares listed in Hong Kong, the Hang Seng China Enterprises Index fell 1.41% to 6,935.91, while the Hang Seng Index was down 1.31% at 19,343.91.

• E-commerce giant PDD Holdings and major search engine operator Baidu posted lower-than-expected third-quarter results.

• Baidu’s Hong Kong shares slumped 9% by midday.

• Despite recent government stimulus efforts, in earnings call, the firm said it had not yet seen any notable improvement in advertising spending patterns or consumer spending.

• The smaller Shenzhen index was down 0.82%, the start-up board ChiNext Composite index was weaker by 1.09% and Shanghai’s tech-focused STAR50 index was down 1.41%.

• Reuters earlier reported that Chinese government advisers are recommending that Beijing should maintain an economic growth target of around 5.0% for next year, pushing for stronger fiscal stimulus to mitigate the impact of expected US tariff hikes on the country’s exports.

• Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.46% while Japan’s Nikkei index was up 1.00%.

• Chinese ADRs fell 1% overnight.

• The yuan was quoted at 7.2461 per US dollar, 0.06% weaker than the previous close of 7.2418.