Alibaba earnings miss drags Hong Kong stocks lower

[WORLD] Hong Kong stocks declined on Friday, paring earlier weekly gains, after Alibaba Group Holding's latest earnings report missed analyst expectations, casting a shadow over Chinese corporates contending with persistent economic pressures.

The Hang Seng Index dropped 0.8 per cent to 23,262.80 by the midday trading break, narrowing its weekly advance to 1.6 per cent. The Hang Seng Tech Index dipped 0.6 per cent. Over on the mainland, the CSI 300 Index shed 0.6 per cent, while the broader Shanghai Composite Index lost 0.5 per cent.

Shares of Alibaba — which owns the South China Morning Post — slumped 5.3 per cent to HK$122.10 after the company reported both revenue and profit figures that fell short of market forecasts. Its healthcare affiliate, Alibaba Health, slid 1.5 per cent to HK$5.16. Other major tech names also declined: Meituan dropped 2.6 per cent to HK$131.90, and Kuaishou Technology retreated 2.5 per cent to HK$50.65.

Alibaba’s underwhelming performance highlights ongoing challenges for Chinese technology firms. Companies in the sector continue to wrestle with a sluggish domestic economy, tighter regulatory oversight, and intensifying competition. A more restrained consumer environment, spurred by the broader economic slowdown, has weighed on growth projections for many tech giants. Meanwhile, regulatory initiatives aimed at curbing monopolistic behavior and fostering fairer competition have created additional hurdles.

Given Alibaba’s significant weighting in the Hang Seng Index, its share price movements often exert a pronounced influence on the broader market. In periods of heightened uncertainty, investors tend to react strongly to earnings disappointments from major index constituents, as reflected in Friday’s decline.

Mainland markets mirrored the cautious tone. The CSI 300 Index, tracking large-cap stocks, and the Shanghai Composite Index, a barometer of broader market performance, both declined — signaling that investor wariness extended beyond the technology sector. These moves underscore the interconnected nature of China’s financial markets and the broader implications of key corporate earnings.

Looking ahead, market participants will be watching for indicators of economic stabilization. Analysts are particularly focused on how Chinese firms, including Alibaba, plan to navigate the prevailing challenges. While some see potential in new strategic initiatives, such as Alibaba’s pivot toward instant retail, others warn that any recovery is likely to be gradual and uneven.