Hong Kong Stocks Decline as Alibaba's Earnings Disappoint, Dampening Trade-Deal Optimism

16 May 2025

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HONG KONG - Hong Kong's stock market experienced a downturn on Friday, eroding gains made earlier in the week, following Alibaba Group Holding's earnings report that fell short of analysts' expectations. This development has cast a shadow over the outlook for Chinese companies operating in a challenging economic environment.

The Hang Seng Index decreased by 0.5% to close at 23,345.05, reducing the week's gain to 2.1%. The Hang Seng Tech Index also saw a decline of 0.3%. On the mainland, the CSI 300 Index dropped by 0.5%, and the Shanghai Composite Index retreated by 0.4%.

Alibaba saw its shares fall by 4.3% to HK$123.40 after reporting revenue and profit figures that missed analysts' forecasts. E-commerce competitor JD.com also declined by 2.7% to HK$131.80. Other technology stocks followed suit, with Meituan decreasing by 3% to HK$131.40 and Kuaishou Technology dropping by 2.1% to HK$50.85.

The recent earnings reports have raised concerns about the sustainability of the market's rebound, which was initially spurred by a temporary ceasefire in the tariff war between China and the United States. As enthusiasm over the trade front diminishes, investors are turning their attention to corporate earnings and macroeconomic indicators. Earlier this week, Tencent Holdings reported mixed results, with quarterly earnings missing estimates.

Fu Jingtao, a strategist at Shenwan Hongyuan Group in Shanghai, commented, "We maintain the view that the market will move in a consolidation pattern in the second quarter. Some of the old concerns are still there. Expectations about a sustained improvement in the fundamentals have yet to emerge, and there's also no big change in expectations for corporate earnings."

In the last quarter of its financial year ending in March, Alibaba's revenue increased by 7% year-over-year to 236.5 billion yuan (US$32.6 billion), falling short of the Bloomberg consensus estimate of 237.9 billion yuan. Net income surged by 279% to 12.4 billion yuan, but this was still below the expected 22.6 billion yuan.