Tencent tumbles, weighing on Hang Seng index as US takes aim at Google’s ties with Chinese firms
Chinese internet conglomerate Tencent Holdings tumbled on Friday, dragging Hong Kong’s benchmark with it, after the US Congress started examining Google’s ties with Chinese technology and telecoms companies such as Huawei, Tencent, and Xiaomi.
Google is the latest company to come under fire from US lawmakers after Facebook was questioned over its ties with Huawei and few other Chinese tech firms.
The Hang Seng Index fell 1.8 per cent, or 554.42 points, to 30,958.21, halting a six-day winning streak and paring the weekly gain to 1.5 per cent. The Hang Seng China Enterprises Index, also known as the H-share index lost 2 per cent, or 242.01 points, to 12,165.79.
Tencent, which has a 10 per cent weighting on the index, shed 3.3 per cent to close at HK$415.00, its steepest daily percentage decline since the end of March. It was the single largest contributor to the decline on the Hang Seng Index, responsible for 106 points of losses.
The sell-off came after some top US lawmakers asked for information from Alphabet’s Google about any data-sharing agreements between the company and Chinese vendors, as well as its partnerships with Tencent and smartphone maker Xiaomi.
Some also raised questions about Google’s partnership with Huawei about its Android smartphone operating system.
“Investors’ next focus will be the G7 summit in Canada later today [Friday], as they closely watch whether US President Trump will soften his trade stance and lift recently imposed sanctions, which have sparked trade war fears,” said Lan Xiaofei, an analyst at Bank of China International in Hong Kong.
In Hong Kong, Chinese telecom companies fell sharply. China Unicom sank 5 per cent to HK$10.32. China Mobile dropped 2.3 per cent to HK$71.50.
Banking stocks also weakened, after a report by Securities Times, which is overseen by the Communist Party mouthpiece newspaper Peop le’s Daily, said Beijing was further tightening its scrutiny of bad loans. China Construction Bank fell 2.1 per cent to HK$8.08, ICBC dropped 1.8 per cent to HK$6.59, Bank of China erased 1.6 per cent to HK$4.18, and Postal Savings Bank of China slid 3.2 per cent to HK$5.41.
On the mainland, the Shanghai Composite Index ended down 1.4 per cent at 3,067.15. For the week, the index shed 0.3 per cent, settling lower for a third week in a row. The large-cap CSI 300 index erased 1.3 per cent to 3,779.62.
The Nasdaq-style ChiNext index too shed 1.1 per cent to 1,711.52.
Financial stocks were the main losers, as Citic Securities lost 2.2 per cent to 18.59 yuan, China Construction Bank fell 2.1 per cent to 7.03 yuan, and ICBC retreated 1.9 per cent to 5.58 yuan.
Still, Foxconn Industrial Internet soared by its 44 per cent daily limit on its debut, closing at 19.83 yuan.