Weibo among US-listed Chinese tech stocks rattled by index's biggest one-day drop in four years
US-listed Chinese tech firms like microblogging site Weibo saw their fortunes dip on Monday as the Bloomberg China-US Equity Index took its biggest hit in four years following a rout of the Chinese stock market last week.
The index sank 5.1 per cent to 121.36 in New York, the steepest drop since September 2011, according to Bloomberg.
In addition to Weibo, big Chinese tech players like software provider Xunlei, online games operator Changyou, and online real estate portal SouFun Holdings all fell by more than 12 per cent, after Beijing's latest efforts to reduce volatility in the Chinese markets apparently did little to calm investors' nerves.
The Chinese market has dropped by a third in the last couple of weeks. In a bid to stabilise the market, Beijing has cut interest rates, suspended IPOs and organised stock purchases by state-run financial firms, among other measures.
Beijing hopes that by putting IPOs on ice, it will increase demand for listed shares.
But while it has created a 120 billion yuan (US$19 billion) stock investment fund by marshalling the resources of its financial firms, the effect may be limited as the fund amounts to less than one-fifth of daily trading volume on the Shanghai Stock Exchange.
The state-run firms will invest up to 15 per cent of their total net assets in blue chip-based exchange traded funds (ETF), according to a joint statement by all 21 brokers.
As volatility continues to pulse through China’s two key exchanges, in Shanghai and Shenzhen, scores of US-listed tech firms may be reconsidering offers to delist.
Some 27 US-listed Chinese companies have received such offers this year, including internet security company Qihoo 360 Technology, and social networking app Momo.
READ MORE: Qihoo offer to go private raises speculation more Chinese internet firms may delist in US
Before the market rout, the temptation to relist in China was clearly there, with a number of companies expecting to see their value jump several times in China.
However, many of the non-binding offers will likely be cancelled in the wake of the latest market turbulence and freezing of IPOs, JL Warren Capital said on Sunday.
Jimmy Zuo, a trader at Guosen Securities in Shenzhen, in southern Guangdong province, said “the market didn’t buy into the [government’s] measures, and the downbeat mood is quite hard to change," Bloomberg reported.
Qihoo 360 announced last week that it had set up a committee of some of its board of directors to consider a non-binding proposal to go private.
The company declined to comment on the matter when the South China Morning Post contacted it.