HONG KONG (Nikkei Markets) — Hong Kong stocks slumped in the morning session on Tuesday, as a sell-off that originated in the technology sector on Wall Street spilled over into the region.
The benchmark Hang Seng Index dropped 1.8% to 25,890.35 by noon, with 47 of it 50 constituents trading lower. Heavyweight Tencent Holdings gave up 3.2%, the biggest drag by points on the index, while mobile components supplier Sunny Optical Technology Group shed 3%. AAC Technologies Holdings, a supplier of components to Apple, slid 3.2% after the iPhone maker slumped 4% overnight.
Trade tensions between the U.S. and China and worries about their impact on global supply chains of technology companies helped drag down the Nasdaq Composite by 3% on Monday. Amid lower-than-expected demand, Apple has in recent weeks slashed production orders for all three new iPhone models it unveiled in September, The Wall Street Journal reported, citing people familiar with the matter.
Shares of Chinese e-commerce major JD.com, which reported a tripling of third-quarter profit and warned of soft sales in some segments in the fourth quarter before U.S. markets opened on Monday, slumped 8.4% in U.S. trading.
Ben Kwong, head of research at KGI Asia, said sentiment in the local market soured after American depository receipts of Chinese companies sank on Monday, following the WSJ report.
Earnings growth for large-cap technology companies “is starting to deteriorate,” Andrew Swan, head of Asian and global emerging markets equities at global fund manager BlackRock, told reporters in Hong Kong on Tuesday. “We do think that we are at the start of de-globalization. There is a recognition that people have bet too heavily,” he added.
Elsewhere in the region, the Shanghai Composite Index dropped 1.6%, while the Nikkei Asia300 Index of regional companies outside Japan gave up 1.4%.
Shares of Xiaomi climbed 4.7% in Hong Kong after the Chinese smartphone maker late on Monday returned to profit in the third quarter from a loss a year earlier, driven by sustained sales growth in India and Western Europe, as well as rapidly expanding revenue from its internet-related businesses. Xiaomi also announced a licensing agreement to sell Meitu branded smartphones.
Meanwhile, photo app maker Meitu sank 6.9% after warning that it expects its net loss to widen in 2018.
Alibaba Health Information Technology, a unit of e-commerce major Alibaba Group Holding, slumped 6.8% after reporting a loss for the six months ended Sept. 30.
— Carrie Chen and Benny Kung
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