SHANGHAI: Hong Kong shares closed down on Friday, dragged by a slump in index heavyweight Alibaba Group after it scrapped plans to spin off its cloud business, while China stocks struggled for direction.

Hong Kong’s Hang Seng Index dropped 2.1% and the Hang Seng China Enterprises Index slumped 2.3% at market close.

The blue-chip CSI 300 Index slipped 0.1%, while the Shanghai Composite Index edged up 0.1%.

For the week, the Hang Seng was up 1.5%, while the CSI 300 lost 0.5%.

Other Asian shares took a breather as a batch of softer US economic data took some of the steam out of Wall Street, but also boosted bonds in a big way while slugging oil prices in a boon for the inflation outlook.

E-commerce giant Alibaba Group’s Hong Kong shares slumped 10% after it scrapped plans to spin off its cloud business, citing uncertainties fuelled by US curbs on exports to China of chips used in artificial intelligence applications.

Also denting sentiment, Chinese billionaire Jack Ma’s family trust is set to sell 10 million American Depository Shares of Alibaba for about $871 million, the company said in regulatory filings.

The Hang Seng Tech Index lost 1.7%, with social media giant Tencent and food-delivery firm Meituan down 3% and 3.9%, respectively.

Onshore China shares remained weak, following last session’s drop as investors were underwhelmed by a meeting between US President Joe Biden and Chinese leader Xi Jinping.

However, analysts at DBS said the Biden-Xi summit “could now bolster sentiment more significantly” although “investor concerns over Chinese growth loom large.”

“With a thaw in the US-China relations and President Biden saying that the US wants better ties to help China’s economy, there is scope for a return of US investment back into Chinese assets going forward,” they said in a note.