Hang Seng Trails Peers as Tech and Travel Stocks Slide

Hong Kong’s Hang Seng Index fell to HK$25,600 on June 3, 2024, about 9% below its high for the year. The index has been weighed down by large year-to-date declines in several heavyweight constituents.

Trip.com has dropped more than 30% this year after regulators opened a probe into its market dominance. Xiaomi has fallen about 27% as rising memory and chip costs have compressed device margins. Tencent has retreated roughly 23% following quarterly results that came in below expectations; the company reported revenue of about 196.5 billion yuan versus an anticipated 199 billion yuan, and gaming revenue grew 9% compared with 24% a year earlier.

Meituan is down more than 22% year-to-date and about 40% over the past 12 months, with intensified competition from other e-commerce and delivery platforms cited as a pressure on market share and margins. Alibaba has eased about 11% this year after reporting an 84% drop in profit while increasing spending on artificial intelligence and other strategic initiatives.

The concentrated losses among several of the index’s largest companies have had a pronounced effect on the Hang Seng’s headline performance. Lenovo Group is an outlier, with shares up roughly 174% in 2024 on stronger demand for personal computers and servers. Other gainers on the index include Contemporary Amperex Technology, Techtronic Industries, CK Hutchison, China Overseas Land and China Resources Land.

The Hang Seng has diverged from several regional and global peers. Taiwan’s benchmark reached record levels this year, South Korea’s main index has posted gains, and major U.S. equity indices including the Nasdaq 100 and the S&P 500 have continued to reach fresh highs.

On technical charts, the Hang Seng has traded in a range between support around 25,087 and resistance near 27,197 in recent months. The index has been consolidating near its 50-day and 100-day exponential moving averages.

Market participants are monitoring upcoming corporate earnings, regulatory announcements and sector-specific cost pressures such as memory and chip prices for information on future price direction.