Hong Kong stocks overturn losses as Meituan, Mengniu soar while Li Auto, EV peers stumble

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The city’s benchmark index recovered from an earlier sell-off in EV makers, courtesy of a rally in Meituan and Mengniu Dairy

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Stock indices and prices on screens outside the Exchange Square in Central. Photo: Xiaomei Chen

Zhang Shidongin Shanghai

Published: 10:43am, 29 Aug 2024Updated: 5:17pm, 29 Aug 2024

Hong Kong stocks overcame a jittery start to log a winning day, as Meituan delivered better-than-expected earnings and more stock buy- back plans shore up sentiment. Electric-vehicle (EV) maker Li Auto sank after a weak earnings report underlined the cost of a brutal price war on sales margins.

The Hang Seng Index gained 0.5 per cent to 17,786.32 on Thursday, clawing back an earlier slide of as much as 1.1 per cent. Today’s advance extended the benchmark index’s advance in August to 2.6 per cent. The Tech Index also rebounded with a 0.5 per cent gain, while the Shanghai Composite Index retreated 0.5 per cent.

Meituan surged 13 per cent to HK$115.70 after its second-quarter profit more than doubled from a year earlier and revenue beat market consensus. Mengniu Dairy jumped 9.7 per cent to HK$13.18 after announcing a HK$2 billion (US$256.5 million) stock buy-back plan. Tencent added 0.9 per cent to HK$377.60.

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The city’s benchmark index had started the day with a steep drop as EV makers suffered a sell-off. Li Auto sank 9.8 per cent to HK$73.15 after profit margins narrowed in the second quarter and earnings failed to surpass consensus amid a brutal price war. Peer Xpeng slumped 5 per cent to HK$29.40 and Nio slid 4 per cent to HK$30.35.

“The market will get stuck in a rangebound trading pattern” without the support from earnings or policy stimulus, Song Yiwei, an analyst at Bohai Securities.

So far, 65 members in the Hang Seng Index have published their interim reports, with profits beating consensus estimates by 1.3 per cent, according to Bloomberg data. Profit growth was 9.4 per cent in the first six months, compared with 6.1 per cent in 2023.

The Hang Seng Index is on course to log its first month of gains since May, aided by optimism the Federal Reserve will cut its target rate next month, the first easing since the lift-off of policy tightening in March 2022. Traders have now bet on a full percentage point cut by the end of the year, according to the odds compiled by CME Group.