Hong Kong stocks slip to near two-week low as tech extends slide on regulatory risks while Alibaba mitigates market losses

Alibaba jumped 6.5 per cent in Hong Kong to add US$39.6 billion in value, its biggest advance since an 8.5 per cent surge on January 20
Tech stock barometer declined 1.6 per cent as analysts see business risks from China’s short regulatory leash

Alibaba

Martin Choi

Published: 10:03am, 12 Apr 2021

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Hong Kong stocks traded near a two-week low as technology stocks slumped and the biggest rally since January in e-commerce giant Alibaba Group Holding failed to galvanise peers amid lingering regulatory concerns.

The Hang Seng Index fell 0.9 per cent to 28,453.28 at the close of Monday trading, adding to a 0.8 per cent loss last week. The gauge reversed an early 0.3 per cent gain following a rally in Alibaba shares. The Hang Seng Tech Index lost 1.6 per cent, adding to a 1.8 per cent setback on Friday. Tencent slumped 1.1 per cent to HK$613.50, while JD.com declined 2.2 per cent to HK$309.20.

Alibaba, the owner of this newspaper, surged 6.5 per cent to HK$232.20, the most since an 8.5 per cent rally on January 20, after a record antitrust fine of US$2.8 billion over the weekend. While it may allow the firm to leave its regulatory troubles behind, it has only shifted the focus of penalty on other operators since a clampdown that began with the halting of Ant Group stock offering in November.

“Since Ant Group’s IPO, the whole industry has anticipated a penalty for the infringement of the antitrust law as alleged by Chinese regulators,” said Louis Tse Ming-kwong, managing director of Wealthy Securities. “Alibaba has cleared the air. But I think this rebound is temporary, because in the medium and long term, Chinese regulators will look at the industry practices.”

Alibaba, which has the fifth-largest weight of 5.2 per cent in the Hang Seng Index, was fined 18.2 billion yuan (US$2.8 billion) by the State Administration for Market Regulation for anti-monopolistic practices. The firm “accepts the penalty with sincerity and will ensure its compliance with determination,” it said.

“With this penalty decision, we received good guidance on some of the specific issues under the anti-monopoly law,” executive vice-chairman Joe Tsai said during a conference call with investors and reporters on Monday morning. “We are pleased that we are able to put this matter behind us.”

The antitrust penalty is “credit negative” for Alibaba, Moody’s analyst Lina Choi said in an email comment. “The required corrective measures will likely limit Alibaba’s revenue growth as a further expansion in market share will be constrained. Investments to retain merchants and upgrade products and services will also reduce its profit margins,” she added.

01:26

China kicks off antitrust probes into Alibaba over alleged monopolistic practices

Among other top losers, Geely Automobile fell 7.1 per cent to HK$19.24. Meituan fell 5 per cent to HK$298.20, while Shenzhou International dropped 2.9 per cent to HK$162.20.

AAC Technologies shot up 12.7 per cent to HK$44.90, its biggest single day gain since July 23. The firm announced in an exchange filing on Monday that it expected unaudited profits to rise to 550 million yuan in the first quarter, or more than 10 times the level a year earlier.

The Shanghai Composite slipped 1.1 per cent, its biggest decline in more than two weeks. The CSI 300 dropped 1.7 per cent, while the tech-heavy ChiNext in Shenzhen retreated 2.3 per cent, both recording their greatest single day declines since March 19.

China Tourism Group Duty Free dropped 2.1 per cent to 295.39 yuan in Shanghai, while TCL Technology fell 4.6 per cent to 8.92 yuan in Shenzhen, as five companies debuted on mainland bourses.

In Shanghai, Zhejiang Mustang Battery rose 44 per cent to 25.37 yuan from its listing price of 17.62 yuan. Hangzhou Kelin Electric gained 68.4 per cent to 56.30 yuan from its debut price of 33.44 yuan, while Guangdong Leary New Material Technology, which produces functional coating films, rose 85.7 per cent to 17.66 yuan from its IPO price of 9.51 yuan.

In Shenzhen, Jiangsu Chinagreen Biological Technology, which develops edible mushroom products, rose 87.4 per cent to 83.88 yuan from its listing price of 44.77 yuan. Ningbo Hengshuai, which manufactures automobile parts, soared 176.9 per cent to 57.26 yuan from its debut price of 20.68 yuan.

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