Hong Kong stocks slip from nearly a one-month high, after Tencent sees biggest drop in a week amid further scrutiny
- Hang Seng Index slips 0.2 per cent after rising for two consecutive days
- Tencent told to put finance related business into new holding company, drops 2 per cent
Hong Kong stocks slipped on Thursday from their highest level in nearly a month, with technology giant Tencent Holdings dragging the benchmark lower amid concerns that mainland Chinese regulators were ramping up a crackdown on fintech companies.
The Hang Seng Index had reached a technical resistance level since February, implying a high chance of a correction, analysts at CSOP Asset Management said in a note on Wednesday. “The market speculates there might be another round of capital [switching] between traditional and tech sectors,” the CSOP analysts said in the note.
Meanwhile, the yuan rose to its strongest level since 2016 versus a basket of its peers. A rally in the Chinese currency gathered pace on Thursday, with the yuan rising 0.22 per cent versus a group of 24 exchange rates to 97.9819, surpassing its previous peak from 2018, according to data compiled by Bloomberg. Against the dollar, the Chinese currency was up 0.2 per cent to 6.3795 in the afternoon on Thursday.
Tencent was among the worst performing blue chips in Hong Kong, falling 2 per cent to HK$605.50, its biggest drop in a week. The e-commerce giant was told by regulators to put its finance related business into a new financial holding company, where it can be better supervised, according to a Caixin report. Tencent has the second highest weighting of 9.2 per cent on the benchmark Hang Seng Index, behind AIA.
“There are still lingering concerns about heightened regulatory scrutiny, so the markets remain a bit cautious,” said Stanley Chan, director of research at Emperor Securities.