Hong Kong Market tumbles on Tencent earnings miss

Hong Kong share market finished session lower on Thursday, 19 May 2022, snapping a four-day winning streak, as sentiment soured on tracking weak lead from Wall Street overnight as well as concerns that surging commodity prices may squeeze corporate profits and cause the global economy to slow down.

Meanwhile, selloff pressure intensified after Tencent Holdings reported no growth in revenue for the first quarter of 2022 and a 51% drop in profit. The disappointing results reflected the impact of Beijing's regulatory crackdown and fallout from the resurgence of COVID infections in China.

At closing bell, the benchmark Hang Seng Index fell 2.54%, or 523.60 points, to 20,120.68. The Hang Seng China Enterprises Index shed 2.68%, or 190.10 points, to 6,899.19.

The fall in local equities came after the Dow Jones index logged its largest drop in almost two years following earnings results from major U.S. retailers Walmart Inc. and Target Corp. that were short of market expectations due to higher fuel and labor costs and issued back-to-back profit warnings, raising concerns over downside risks to growth.

Rising inflation, the conflict in Ukraine, prolonged supply chain snarls, pandemic-related lockdowns in China and prospects of aggressive policy tightening by central banks have weighed on the markets recently, stoking concerns about a global economic slowdown.

Shares of Chinese tech behemoth Tencent plunged 6.51% after reporting that its quarterly profit halved. The disappointing result reflected the drawn-out effect of China's year-long regulatory crackdown and the fallout of the most severe Covid-19 flare-up since the Wuhan outbreak in 2019.

Other Chinese tech stocks in Hong Kong also saw heavy losses, with Alibaba Group sank over 7%, while Meituan shed nearly 4% and NetEase slipped almost 3%.

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