Hong Kong Stocks End The Week In A Rout As China's Central Bank Pumps $100 Billion Into Banking System Ahead Of Long Weekend

Shares in Hong Kong ended the week lower after a rout of selling among tech names and as property continues to skewer markets.

Investors also focused on bank earnings next week which they expect to be lower due to tightening margins. China’s Central Bank pumped a record stimulus into the banking system to keep short-term prime loan rates steady amid the recent credit woes.

The Hang Seng Index was 0.72% off at the end of Friday at 17,172.13 points while in China the CSI 300 Index closed down 0.65% at 3,510.59 points. Both indexes hit new 11-month lows.

Data from investment bank Morgan Stanley MS showed that so far this month, foreign investors have sold $1.6 billion of Chinese shares, with the most concentrated selling in Tencent Holdings Limited TCEHY, Alibaba Group Holdings Limited BABA and JD.com, Inc. JD. The selling extends further disposals of Chinese assets by foreign funds in September to the tune of $3.5 billion.

Separately, China’s Ministry of Commerce announced mixed numbers for foreign investment. In the first 9 months of this year the government said that there were 37,800 new foreign-invested enterprises established in China, which is a 32.4% rise over the same period last year. In dollar sums however, foreign direct investment was just 920 billion RMB ($125.7 billion), which was 8.4% lower than during the same period a year ago.

Shares in all three Chinese tech companies extended week-long losses Friday, with Tencent and Alibaba down 5% over the week and JD.com falling 8% from its Monday opening price. JD.com’s Singles Day sales open next Monday morning at 8 am Hong Kong time and Alibaba’s TMall presale promotions begin at the same time the following day.

Among other consumer names, China Mobile Limited said that its net profit was 105.51 billion RMB. That was up 7.1% on the same period last year but fell just shy of most analysts’ forecasts and the stock fell 1.3% on the day.

Embattled property developer China Evergrande Group EGRNQ scrapped court hearings scheduled this week with creditors to negotiate $20 billion of its offshore debt. Meanwhile, bondholders of Country Garden Holdings Limited CTRYF are reported to be trying to reach out to the management of China’s largest property firm by developments to discuss a resolution to a missed bond payment this month.

In Hong Kong, house prices fell to their lowest level in six-and-a-half years, according to new data from Centaline Property Agency Ltd. Used home prices fell 1.2% in the week ending October 15, while 20,483 new developments sat empty during the third quarter overall – the most in 19 years. Centaline said in a report that developers were slashing prices on new homes by as much as 20% now to stimulate flagging demand.

China Evergrande was down 3.6% while Country Garden was one of the day’s biggest risers, up 5.6% on the news of a potential resolution to the company’s offshore debt troubles.

Real estate sector declines prompted the People’s Bank of China to inject 733 billion RMB, or $100 billion into banks at the close of business Friday to ensure lending remains stable in the country. That represents the largest liquidity injection in history in the form of a Chinese government stimulus.

Banks begin to declare earnings for the third quarter next week when the markets open following a holiday on Monday. Investors are concerned that bank earnings could fall by as much as 10% on the real estate problems. JP Morgan Chase & Co JPM expects non-performing loans to rise to 7.5% from 4.5% previously. China bank names ended the day marginally lower, but did not do as badly as other sectors.

EV Makers dropped for a second day in a row after China said that it would begin to impose export curbs on batteries for energy-efficient vehicles. After December 1, exporters will have to have permits to export EV batteries and other technologies that use graphite in their manufacturing process. The government cited national security concerns with the export of such products.

Nio Inc NIO fell 3.7%, Li Auto Inc LI was down 1.13% and XPeng Inc XPEV finished 0.2% in the green as bargain-hunters searched for deals amid a red wave. Nio fell 10% over the week while Li Auto tumbled 7%. XPeng has plunged the most of all three, by 16.5% over the past 5 days trading.

China Evergrande New Energy Vehicle Group Limited EVGRF failed to hold onto significant gains made a day earlier as most EV makers were targeted by short-sellers and it dropped 12.5% Friday.

Caixin reported that solar energy is now the leading source of alternate energy for China’s Belt-and-Road initiatives around the world, with an emphasis on the UAE. The country has doubled its solar equipment exports in the last 8 years to $44.8 billion as a result of the state policy focus.

Market leaders among Chinese solar stocks Daqo New Energy Corp DQ, Xinte Energy Co Ltd. and LONGi Green Technology Company Limited all fell around 5% this week on stock exchanges in the US, Hong Kong and China, respectively.