Hong Kong stocks enter correction phase as bears maul Tencent, US audit law puts Chinese firms at risk of expulsion from Wall Street
- Hang Seng Index has declined 10.2 per cent from its February 17 peak, Tencent slumps 20.9 per cent as correction, bear-market phase sets in
- MSCI benchmarks tracking Chinese onshore and offshore-listed stocks have slumped by 14 to 17 per cent from their peaks before Thursday
The Hang Seng Index tumbled by as much as 1.5 per cent before closing 0.1 per cent weaker at 27,899.61 on Thursday. The benchmark declined for a fifth day, the longest losing streak since September 2019, bringing the slide to more than 10 per cent from its February 17 high.
Other technology stocks also suffered a drubbing. Smartphone maker Xiaomi Corp lost 4.4 per cent to HK$23.90 while AAC Technologies fell 1.1 per cent to HK$39.65. Alibaba Group Holding, the owner of this newspaper, tumbled 3.9 per cent to HK$221.
The penalty for non-compliance, as stipulated by a law known as The Holding Foreign Companies Accountable Act (HFCA) that Congress approved in December, is ejection from the New York Stock Exchange or Nasdaq.
“Regulatory disruptions such as the HFCA Act amud geopolitical risks and tension are likely to persist,” said Bruce Pang, head of research and macro strategy at China Renaissance Securities in Hong Kong. “It will be hard for China’s homegrown tech giants to argue or justify that they are not influenced by the government. The SEC public consultation will give us more colours on how their ADRs would be flagged under these terms.”
An S&P Dow Jones index tracking 50 US-listed Chinese stocks fell 6.8 per cent on Wednesday, the most since March 16 last year. The gauge has declined almost 14 per cent since February 26, set for the first monthly loss since September, according to Bloomberg data.
Before Thursday’s trading. MSCI benchmarks tracking Chinese stocks have slumped by 14 to 17 per cent from their peaks.
Who’re you calling a cheat? China rebuts US fraud claim with overture
The slump from its record-high on January 25 has erased HK$$1.54 trillion (US$198 billion) from its market value.
Two companies debuted in China. In Shanghai, Hangzhou Alltest Biotech rose 30 per cent from its offer price of 133.67 yuan. Cosmetics manufacturer Yunnan Botanee Bio-Technology rose 244 per cent from its listing price of 47.33 yuan in Shenzhen.
Markets in the Asia-Pacific were holding up with small gains. Japan’s Nikkei 225 jumped 1.1 per cent, while South Korea’s Kospi added 0.4 per cent. Australia’s S&P/ASX 200 rose 0.2 per cent.