Hang Seng Index attempting to rebound from nine-month low

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Hang Seng Index – What to expect

The ongoing uncertainty surrounding Chinese equities continues to revolve around the increased regulatory risks weighing on its large domestic technology firms, which takes up more than 25% weightage of the Hang Seng Index. This includes clampdown on algorithms that restrict competition and increased supervision of data collection, which directly put a cap on companies’ profitability. With recent release of a five-year blueprint calling for greater regulation across key industries, one may expect more restructuring to come, with no quick resolution of the situation.

Based on the daily southbound Hong Kong stock connect net turnover, there have been net inflows of around HKD2.6 billion over the past two trading days. Bottom-fishing sentiments have been fuelled by stellar corporate earnings drawing interest from some institutional investors, along with Tencent Holdings’ share buyback. Although yesterday’s inflow was the highest in two weeks, overall fund flow for August still stands at a net outflow of HKD1.5 billion. Therefore, it awaits to be seen if the recent up-move indicates a longer-term shift in sentiments.

Tech giants drag Hang Seng Index

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Chinese technology shares fell sharply, snapping a three-day rally as earnings from a number of firms failed to meet investor targets.

The Hang Seng Tech Index closed 1.9 percent lower in Hong Kong at 25,415.69, losing 278 points. The index was weighed down by live streaming giant Kuaishou Technology and electronics component maker AAC Technologies Holdings Inc., which both fell by at least 9.2 percent after missing estimates.

The continued drop comes after the government’s shock ban last month of profits at tutoring companies, which triggered a selloff of about $1 trillion in Chinese shares listed globally. Investors are concerned that even with the huge loss in market value seen already, fragile sentiment leaves the technology sector vulnerable to further losses.

“After the technical rebound in the last few days, the market is lacking momentum amid profit taking as investors are still watching out for any new regulation,” said Daniel So, a strategist at CMB International Securities Ltd. in Hong Kong.

Kuaishou reported a wider-than-expected loss as it increased spending to retain users. Monthly and daily active users also slid from the previous quarter. Its shares, which were listed in Hong Kong earlier this year, have lost more than 80 percent of their value since a February peak.

Meanwhile, China’s CSI 300 Index dropped 2 percent, its first decline in four days, as investors offloaded shares of liquor makers including Kweichow Moutai Co., which fell 4.2 percent. The baijiu giant is stressing product price stability ahead of holidays in coming months, according to a media report.

The liquor sector’s drop is more of a “temporary pullback” following recent gains, said Capital Securities analyst Gu Xiangjun.

In a sign that the recent market volatility has drawn the attention of China’s top leadership, a senior official on Thursday sought to allay fears that Beijing’s campaign to achieve “common prosperity” means uniform egalitarianism and could hurt entrepreneurship.

Han Wenxiu, a senior official at the Communist Party’s central financial and economic affairs commission, said at a press briefing that the authorities will promote the welfare of all people and “make the pie bigger and divide it well.” Han added that China will create more opportunities for all to become wealthy and avoid falling into the trap of “welfarism.” – Bloomberg

Hong Kong shares slip in subdued trade ahead of Powell speech

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  • Hang Seng index ends down 0.13%

  • China Enterprises index HSCE falls 0.25%

  • Trading volume soft ahead of U.S. Fed symposium

Aug 25 (Reuters) - Hong Kong shares slipped on Wednesday after two sessions of strong gains, but trading activity was muted ahead of the U.S. Federal Reserve symposium on Friday.

** At the close of trade, the Hang Seng index was down 33.97 points or 0.13% at 25,693.95, after climbing more than 3.5% in the previous two sessions. The Hang Seng China Enterprises index fell 0.25% to 9,076.03. ** The sub-index of the Hang Seng tracking energy shares rose 1.2%, while the IT sector rose 0.21%, the financial sector ended 0.19% lower and the property sector dipped 0.06%. ** About 1.56 billion Hang Seng index shares were traded, roughly 73.2% of the market’s 30-day moving average of 2.13 billion shares a day. The volume traded in the previous trading session was 2.05 billion. ** The top gainer on the Hang Seng was Xinyi Solar Holdings Ltd , which gained 6.42%, while the biggest loser was ANTA Sports Products Ltd, which fell 6.83%. ** ANTA was also the biggest H-share percentage decliner, followed by Kuaishou Technology, which fell 3.55% and Nongfu Spring Co Ltd, down by 2.96%. ** The top gainers among H-shares were JD.Com Inc up 5%, followed by Shimao Group Holdings Ltd, gaining 3.52% and CITIC Ltd, up by 3.37%. ** China’s main Shanghai Composite index closed up 0.74% at 3,540.38 points, while the blue-chip CSI300 index ended up 0.2%. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.33%, while Japan’s Nikkei index closed down 0.03%. ** The yuan was quoted at 6.4764 per U.S. dollar at 08:07 UTC, 0.09% weaker than the previous close of 6.4705. (Reporting by the Shanghai Newsroom; Editing by Rashmi Aich)