Tech stocks sink in Hong Kong on renewed concerns about regulations as China slows the approval for online games

Hang Seng Index tumbled 2.3 per cent, the biggest drag in more than six weeks as tech giants paced losses
Tech benchmark sank 4.5 per cent after Beijing summoned Tencent, NetEase and others, and said to slow the approval for new online titles

Hang Seng Index

Iris OuyangandCheryl Heng

Published: 10:41am, 9 Sep, 2021

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Hong Kong stocks fell by the most in six weeks as concerns about regulatory tightening in China revived after Beijing chastised mobile games developers and slowed the approval for new titles. Haitong Securities crashed amid a probe for market violations.

The Hang Seng Index tumbled 2.3 per cent to 25,716 on Thursday, the most since a 4.2 per cent setback on July 27. The city’s tech benchmark sank 4.5 per cent, also the biggest loss since July 27. The Shanghai Composite Index climbed 0.5 per cent to 3,693.13, reversing an earlier decline.

Tencent Holdings, China’s biggest developer of online games, led losses with a 8.5 per cent slide while its closest rival NetEase slumped 11 per cent. Alibaba Group Holding, the owner of this newspaper, lost 5.8 per cent while Meituan fell 4.8 per cent.

“The regulatory policies are showing that government is imposing more control in the tech [sector], particularly online gaming,” said Edison Pun, senior market analyst at Saxo Markets. “The Hang Seng and tech stocks are facing strong resistance, so the upside will be very limited given the current situation.”

China is said to have slowed the approval of new video games, sources told the Post, after regulators summoned major developers and streaming platform operators on Wednesday to find out how they will implement Beijing’s new restrictions on minors. The meeting was also attended by the Cyberspace Administration of China and the Ministry of Culture and Tourism, Xinhua News Agency reported.

Education tech companies also slumped. Scholar Education slipped 7.8 per cent while New Oriental Education and Technology lost 5.5 per cent.

“Investors are worried whether there will be more regulations and there is a risk of this spreading to other industries,” said Kenny Tang Sing-hing, chairman of the Hong Kong Institute of Financial Analysts and Professional Commentators. “The policy disruptions is less severe than before but people are observing [the situation].”

Separately, China’s second-largest brokerage Haitong Securities said the China Securities Regulatory Commission is investigating the firm for potential breaches. The stock slumped 5.5 per cent in Hong Kong and 8.4 per cent in Shanghai.

COFCO Engineering & Technology surged 283 per cent to 13.60 yuan on its first day of trading. Beijing Caishikou Department Store jumped 44 per cent to 14.40 yuan while Shanghai Yizhong Pharmaceutical rallied 29 per cent to 48.99 yuan in their onshore debut.

China released its consumer price index on Thursday, showing inflation slowed while prices at factory gates rose to a 13-year high amid higher commodity prices and also due to low year-ago base effects. Producer prices jumped 9.5 per cent in August from a year earlier, versus a 9 per cent pace in July.

Traders are monitoring the European Central Bank meeting later Thursday for signs policymakers are scaling back stimulus. The ECB will shed light on its plan for bond purchases in the fourth quarter amid economic reopening while the delta variant spread.