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Hong Kong Stocks Extend Losses Led by Tech Stocks, Tencent Broke Out to Downside

Technology stocks listed in Hong Kong experienced a sell-off on Tuesday, led by Chinese technology giant Tencent following a plunge in US tech stocks overnight.

Shares of Tencent tumbled over 3.3 per cent to close at HK$355, more than HK$ 100 billion wiped off its market capitalisation.

That brings Tencent 25 per cent lower than its January peak, wiping off about $140 billion of market value, the biggest wipeout of shareholder wealth worldwide, as measured from the date of each stock’s 52-week high.

The disappointing performance of the stock comes amid analysts’ pessimism over the company’s earnings which are scheduled to be release in two weeks.

JP Morgan, in its latest research note, cut Tencent’s target price to HK$480 from previous HK$500 and lowered forecast for the company’s profit in 2018 and 2019 by 6 per cent and 4 per cent respectively, citing the delay of regulatory approval of its mobile game Player Unknown’s Battlegrounds among other factors.

Earlier this month, Morgan Stanley cut Tencent’s target price to HK$ 498 and lowered the forecast for its revenue in the second quarter by 4 per cent to 74 billion yuan due to the put-off of the popular mobile game.

The benchmark Hang Seng Index dropped 0.5 per cent to end at 28,583. Mobile components suppliers Sunny Optical Technology Group and AAC Technologies Holdings gave up 4.8 per cent and 0.4 per cent, respectively.

Chinese property developer Country Garden Holdings clawed back into gaining territory to close o.2 per cent higher after dipping 2.1 per cent intraday, ending three-day loosing streak. The stock found little support from news that the company was resuming construction work that it had suspended for safety checks following an accident last week in China, which resulted in the death of six workers.

Energy companies outperformed, PetroChina rose 1.2 per cent in Hong Kong after China’s largest oil and gas producer said it expects first half net profit to have more than doubled from a year earlier.

Future Land Development Holdings slid 2 per cent, trimming its gains so far in 2018 to about 45 per cent despite that the developer said on Tuesday it expects profit for the six months ended June to have increased at least three times from a year ago.