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Asia markets mixed as Alibaba plunge drags Hong Kong

Hong Kong: Hong Kong tumbled Friday on an otherwise positive day for Asian markets, with Chinese ecommerce titan Alibaba tanking more than 10 percent after warning of a weaker outlook.

Alibaba said Thursday that net profit tumbled 81 percent in the second quarter and revenue grew less than forecast as it was hit by the impact of slowing economic growth and a government crackdown on the tech sector.

The firm, once the poster child of China’s high-flying private enterprises, also said income growth over the rest of the fiscal year fell short of expectations, adding that certain factors could further impact results including “changes in laws, regulations and (the) regulatory environment” such as those related to privacy and data.

The sharp loss in Hong Kong reflected a more than 11 percent fall in its New York shares and comes after a painful year that has seen the firm in the crosshairs of Beijing’s regulatory drive to rein in companies it thought were growing too powerful.

With Alibaba a big player on Hong Kong’s Hang Seng Index, the market plunged 1.7 percent, and other tech firms including Tencent and XD suffered smaller losses.

Singapore, Wellington, Taipei, Bangkok and Manila also slipped.

But Tokyo climbed as the government announced plans to inject $490 billion into the Japanese economy to kickstart the pandemic recovery.

There were also gains in Shanghai, Sydney, Seoul and Jakarta.

Traders had been given a positive lead from Wall Street, where the S&P 500 and Nasdaq ended at record highs, though focus remains on surging inflation and growing expectations that central banks will tighten monetary policy sooner.

Data this month has shown prices rising at levels not seen for three decades in the United States, 18 years in Canada and 10 years in the United Kingdom owing to soaring energy costs and global supply chain snarls.

– ‘Lira remains a punching bag’ – Finance chiefs in some countries including South Korea and New Zealand have already hiked interest rates, and the Bank of England is expected to follow suit before the end of the year.

But eyes are on the Federal Reserve, which has already announced plans to wind down its vast bond-buying programme. It is now facing increasing pressure to hike borrowing costs as soon as mid-2022.

“Near term concerns are that banks are rolling back their estimates of when the Fed will start to raise overnight interest rates in 2022, Fed comments about seeing broader-based inflation trends, the possibility of a change in the Fed chairman by the Biden administration, and fears about a seasonal spike in Covid cases,” said markets analyst Louis Navellier.

Oil extended Thursday’s advance after a recent sell-off, with little reaction to news that China will release some of its reserves following a call by US President Joe Biden to Xi Jinping to help ease a surge in prices that is partly to blame for the inflation spikes.

“The oil market deficit will still remain despite the tapping of reserves and the next big move for prices will most likely depend on the weather,” said OANDA’s Edward Moya.

“Natural gas prices may be the key short-term driver as Russia plays hardball with Europe. Any natural gas shortages will lead to additional crude demand as the scramble for alternative energy sources intensifies.”

Meanwhile, the Turkish lira sat around 11 to the dollar, slightly strengthening after hitting a record low Thursday in response to the central bank’s decision to cut interest rates for the third consecutive month following pressure from President Recep Tayyip Erdogan.

The move came despite inflation sitting at nearly 20 percent — four times the government target — while the lira has lost a third of its value this year.

And Moya warned: “The lira remains a punching bag and further weakness has no end in sight.”

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