Hang Seng Drops in H1 as Nikkei, Kospi Surge

Hong Kong’s Hang Seng Index fell more than 10% in the first half of the year as several of its largest constituents underperformed, while Japan’s Nikkei 225 rose 34% and South Korea’s Kospi gained 85%.

Trip.com retreated about 42% after reporting weak results and following an anti-competitive investigation. The company introduced new compliance measures after the probe.

Xiaomi dropped roughly 40% for the period. The company reported a 10% decline in first-quarter revenue and a 56% fall in profit, and it reported higher chip and memory costs.

BYD fell about 34% after Chinese authorities reduced some electric-vehicle subsidies. Competition from domestic rivals including Nio and Li Auto increased in recent months. Alibaba’s shares weakened as the company recorded higher artificial intelligence expenses and slower e-commerce sales.

Commodity-linked names on the Hang Seng also fell. Shares of Laopu Gold declined about 38% as local gold prices moved lower, and Aluminium Corporation shares weakened as aluminium prices fell.

Not all large-cap Hong Kong stocks were down. Lenovo Group rose 127% during the period, reporting fourth-quarter revenue of $21.58 billion, annual revenue of about $83 billion and net income of $559 million. Other gainers included WuXi AppTec, Techtronic Industries, CK Hutchison and HSBC Holdings.

Japan’s gains were concentrated in memory suppliers, including firms such as Kioxia, and other companies tied to the memory sector. South Korea’s Kospi advance was led by Samsung Electronics and SK Hynix as memory prices and demand rose. Spending related to data centers and corporate IT also supported companies in server supply chains.

Technical indicators for the Hang Seng showed a decline from a January high near 28,058 to a low around 22,516. The index recorded a death cross when the 50-day moving average crossed below the 200-day moving average. The index traded below the Ichimoku cloud and the supertrend indicator. A nearby technical level is 22,537.

Differences in sector weightings and recent company results corresponded with the split in performance across regional markets. Earnings announcements, China policy changes including the reduction of some EV subsidies, regulatory probes and shifts in commodity and chip markets coincided with the gap between the Hang Seng and other major Asian indices.