Hong Kong stocks wavered on Thursday morning, with the benchmark hovering around a seven-week low, as concerns lingered about a regulatory crackdown in China that has crippled industries ranging from technology and ride-hailing to private education.
The Hang Seng Index edged up 0.1 per cent to 24,714.83 at the noon break, reversing an intraday loss of as much as 0.6 per cent. The Hang Seng Tech Index rose 0.7 per cent, while China's Shanghai Composite Index dropped 0.1 per cent.
Stocks with the biggest losses this year led the pack of gainers on the benchmark, as Haidilao International Holding and Alibaba Group Holding rose at least 2.1 per cent. The two stocks have lost more than 40 per cent so far in 2021. New World Development was the worst performer, with a decline of 5.8 per cent.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
In its latest onslaught, China has suspended Tencent Holdings, the operator of WeChat with its 1.2 billion users, from launching new apps and updating its existing apps as part of a "temporary administrative guidance", according to local media reports. Tencent indirectly confirmed the reports, saying in a statement that it was cooperating with the authorities.
The punitive measure is expected to further sour sentiment around Chinese technology stocks trading in the city, which are already reeling from a new bout of sell-offs after big earnings misses by Alibaba and Bilibili. Some traders have been burned as they had bet that Beijing's regulatory storm was nearing an end and that the battered valuations of the sector were in for a rebound.
"Hong Kong stocks are still facing a couple of issues that have remained as an overhang, such as the antitrust law, uncertain policies, the debt woes of Chinese developers and the power outage," Central China Securities said in a report on Thursday.
Local stocks have also been weighed by expectations of a faster unwinding of stimulus by the US Federal Reserve, a move that will strengthen the dollar and spur outflows from other economies. Minutes released from the November Fed meeting highlighted the risk of inflation and signalled a quicker tapering off of bond purchases. The US dollar index traded close to its highest level in 16 months.
Tencent added 1.9 per cent and Meituan lost 0.6 per cent before its earnings are released on Friday.
Kaisa Group Holding, the troubled Chinese property developer, surged 19 per cent as the stock resumed trading after being suspended for almost three weeks. It agreed to sell its stake in a development in the city and asked bondholders to exchanges notes maturing next month to avert a default.
Other major stock gauges in Asia were generally strong, except that in South Korea, which bucked the gains trend.
Alibaba owns the South China Morning Post.