Hong Kong stocks suffer worst fall in 7 months; Tencent plunges as online game described as ‘poison’
Hang Seng Index declines 395.16 points, or 1.5 per cent, to end at 25,389, while Shanghai Composite ends 0.4 per cent lower, its first drop in four sessions
Chinese and Hong Kong investors dumped tech shares on Tuesday, after the Communist Party’s mouthpiece labelled Tencent’s popular online game Honour of King s as “poison” and called for tighter industry regulation, with the tech sell-off spilling over to wider markets and pounding major benchmark indices.
In Hong Kong, the Hang Seng Index declined 395.16 points, or 1.5 per cent, to end at 25,389.01, marking the steepest percentage decline since mid-December. The index briefly tumbled 532 points, or 2.1 per cent, to a low of 25,251.72.
The Hang Seng China Enterprises Index, which tracks the performance of Chinese companies listed in Hong Kong, dropped 106.5 points, or 1 per cent, to close at 10,305.98.
Chinese online major Tencent was the biggest drag on the benchmark, contributing more than 110 points of losses. The stock has a 10 per cent weighting in the Hang Seng Index.
Tencent finished at HK$269.2, down 4.1 per cent, its biggest fall in nearly 17 months, wiping out more than HK$100 billion (US$12.81 billion) of market capitalisation.
The losses came after the state-run People’s Daily published an editorial on Tuesday that labelled Tencent’s Honour of Kings, an online game boasting 80 million active daily users, as “poison” and “a harm” to people’s life and the society. The newspaper published a separate online article later in the day, calling for tighter regulation of mobile games.
“The articles are apparently targeting Tencent,” said Chi-yung Sam, senior strategist for South China Financial Group.
“Investors are concerned whether the criticism is just a start. Potential policy risks could affect the valuations of the industry.”
Linus Yip, chief strategist for First Shanghai Securities, said global tech stocks are currently in a correction, which has added to the selling pressure on Tencent.
Several online game developers fell significantly.
Boyaa Interactive International declined 3.8 per cent to HK$3.32. IGG lost 3 per cent to HK$11.78. Forgame Holdings also shed 0.6 per cent to HK$13.92.
Acoustic component manufacturer Aac Technologies gave up 2.4 per cent to HK$95.5. Software developer Kingsoft Corp pulled back 2.4 per cent to HK$95.5.
Among other market movers, Pan-Asian life insurer AIA Group dropped 2.6 per cent to HK$54.8. China Life Insurance and Ping An Insurance fell 2.3 per cent and 1.4 per cent close at HK$23.55 and HK$51.9 respectively.
However, PetroChina jumped 2.7 per cent to HK$4.9, after oil prices staged an eight-day rally in New York overnight. Cnooc also advanced 1.3 per cent to HK$8.64.
On the mainland, the benchmark Shanghai Composite halted a three-day winning streak, retreating 0.4 per cent to end at 3,182.8.
The large-cap CSI300 dropped 0.9 per cent to 3,619.98. The Shenzhen Composite and the ChiNext Index were down 0.5 per cent and 0.4 per cent separately to 1,896.53 and 1,829.51.
Online game developers listed on the mainland also struggled.
Hangzhou Shunwang Technology and Wuhu Shunrong Sanqi Interactive Entertainment Network Technology sank 7 per cent and 5 per cent respectively, closing at 25.77 yuan and 23.73 yuan.