Hong Kong stocks tumble, Baidu flops, Smoore crashes as markets turn defensive on China regulatory and sanctions risks

Benchmarks in Hong Kong and mainland bourses declined by about 1 per cent after China and Western nations fought over Xinjiang issues

Baidu ended its debut with zero premium, while Smoore crashed after peer RLX, on signs of tightening tobacco industry regulations

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Pedestrians stand in front of a screen showing a message marking the listing of Baidu Inc. on the Hong Kong stock exchange on March 23. Photo: Bloomberg

Published: 10:47am, 23 Mar 2021Updated: 5:21pm, 23 Mar 2021

Hong Kong stocks fell to the lowest level since January while mainland peers declined with investors spooked by heightened domestic regulatory risks. An escalation in sanctions war with Western nations over Xinjiang also turned markets on the defensive mood.

Baidu Inc, China’s dominant internet search engine company, flopped on its trading debut in Hong Kong with zero premium over its IPO price of HK$252. China’s top vaping devices producer Smoore slumped, following a sell-off in peer RLX Technology in the US. China signalled it will rein in the tobacco industry after clamping down on fintech players.

The Hang Seng Index retreated for a third day, losing 1.3 per cent to 28,497.38 to reach the lowest level since January 29. The Shanghai Composite fell 0.9 per cent, while the CSI 300, which tracks the biggest stocks listed in Shanghai and Shenzhen, and the tech-heavy ChiNext in Shenzhen depreciated by about 1 per cent.

The US, EU, UK and Canada banded together to sanction Chinese officials over alleged human rights abuses in Xinjiang on Monday, sending a clear sign that the Biden administration plans to wield its alliances as a powerful tool to counter an increasingly assertive China. China retaliated in kind.

“Rising geopolitical tensions have had some psychological impact on the markets,” said Kenny Tang Sing-hing, co-founder and chief executive of Royston Securities in Hong Kong. Beijing’s potential tightening of regulations around the e-cigarette makers have also had a “significant impact” on investor sentiment, he added.

In Hong Kong, some 48 of the 55 benchmark constituents of the Hang Seng Index fell. The Hang Seng Tech Index slid 2.5 per cent, bringing the slump to 24.2 per cent from its peak on February 17.

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