HONG KONG: Hong Kong stocks weakened on Tuesday as tech stocks led a broad selloff, with Xiaomi’s planned share sale triggering concerns about stretched valuations across the market.
Hong Kong’s benchmark Hang Seng Index declined 2.4% to the lowest level in nearly two weeks, and the Hang Seng Tech Index lost 3.8% to the lowest level since March 4.
Onshore shares were muted on Tuesday, with the blue-chip CSI300 index declining less than 0.1% and the Shanghai Composite index little changed.
Shares of Xiaomi slid 6.3%, their biggest decline since October, after the company announced plans to raise up to $5.27 billion from a share sale.
Peer Xpeng tumbled 7.5%, and Li Auto weakened 4.9%.
“Xiaomi’s share placement serves as a reminder to investors that some companies may have hit high valuations following the recent rally. The markets are concerned that other companies might do the same and sell their shares,” said Kenny Ng Lai-yin, securities strategist at China Everbright Securities International.
Still the placement could be only an “excuse” for the market decline in general after this round of a 6,000-point rally, said Steven Leung, director of institutional sales at UOB Kay Hian in Hong Kong.
“Investors tend to take profit towards quarter end, especially as earnings and the National People’s Congress (NPC) policies have largely been discounted,” Leung said, referring to muted market reaction to earnings from Tencent and Xiaomi last week.
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