Alibaba Down 2%, NIO Down 9%: Hong Kong Stocks Slump for a Third Day

• Smartphone maker Xiaomi’s revenue slipped 19 per cent in the first quarter, while Tesla challenger Xpeng saw its revenue nearly halve

• US lawmakers are still locked in their negotiations over raising the debt ceiling with only days to go before an unprecedented default could occur

The Hang Seng Index slid was heading towards a third weekly loss on Thursday. Photo: EPA-EFE

Hong Kong stocks dropped for a third day as Xiaomi and Xpeng reported disappointing earnings amid China’s weak economic recovery. A stalemate in debt ceiling talks in the US continued to sap sentiment.

The Hang Seng Index slid 2 per cent to 18,742.80 at 10.05am, as it headed towards a third weekly loss. The Tech Index dropped 2.1 per cent while the Shanghai Composite Index declined 0.5 per cent.

Alibaba dropped 2.7 per cent to HK$78.85 and Tencent lost 2.8 per cent to HK$323. Food delivery giant Meituan dropped 3.6 per cent to HK$125.70 before reporting its results later today. Property developer Longfor Group slipped 3 per cent to HK$15.66, while Country Garden weakened 2.7 per cent to HK$1.470. NIO weakened 9.1 per cent to HK$61.30.

Smartphone maker Xiaomi’s revenue slipped 19 per cent in the first quarter, hit by weak consumption in China and sluggish global demand, while Lenovo, the world’s largest PC maker, reported that its revenue dropped for three consecutive quarters ending March. Similarly, Tesla challenger Xpeng saw its revenue nearly halve as an aggressive price war between electric-car makers narrowed margins.

“China’s recovery is losing steam,” said Arthur Budaghyan, chief emerging markets strategist at BCA Research, in a webinar on Wednesday. Consumer spending growth has lagged expectations, while the property sector is not about to turn a corner any time soon, he said.

Weighing on sentiment, US lawmakers are still in a stand-off in their negotiations over raising the debt ceiling with only days to go before the government faces an unprecedented default. Fitch Ratings said on Thursday it has placed the US’s AAA credit rating on watch for a possible downgrade, as the risk of missed payments on the rise.

Elsewhere, three stocks debuted on Thursday. Horizon Construction Development crashed 27 per cent and Edianyun lost 4.4 per cent during their first day of trading in Hong Kong, while Zhejiang Tongxing Technology surged 84 per cent in Shenzhen.

Major Asian markets were mixed. The Nikkei 225 in Japan added 0.5 per cent. The S&P/ASX 200 Index in Australia lost 0.9 per cent while the Kospi in South Korea declined 0.3 per cent.