Tech stocks sink in Hong Kong on China’s tightening curbs as Tencent erases 2021 gains

Hang Seng Tech Index tumbled 2.3 per cent to the lowest level in seven weeks as Tencent erased all of the advance this year
China’s powerful cyberspace agency has ordered for more reviews hours after taking ride-hailing app Didi Chuxing off the nation’s app stores

Hong Kong stock market

Iris Ouyang

Published: 10:29am, 5 Jul 2021

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Chinese tech stocks sank to a seven-week low in Hong Kong trading after China’s powerful cybersecurity watchdog ordered more reviews into internet-platform operators for security and privacy breaches, while a private report added to signs of economic slowdown.

The Hang Seng Tech Index slumped 2.3 per cent for a fourth straight day of declines, reaching the lowest level since May 17. The gauge fell 4.2 per cent last week, the most in seven weeks. Baidu and JD.com each lost more than 2 per cent while Kuaishou tumbled almost 6 per cent.

Tencent Holdings plunged 3.6 per cent to HK$554, erasing all of its 2021 gains. Meituan crashed 5.6 per cent to HK$287 while Alibaba Group Holding, the owner of this newspaper, tumbled 2.8 per cent to HK$206. The slump has erased US$540 billion of market value of the trio from the peak on February 17 to last Friday, according to Bloomberg data.

The Hang Seng Index lost 0.6 per cent to 28,143.50, following its worst week since February. In mainland China, the Shanghai Composite Index rose 0.4 per cent, the CSI 300 Index added 0.1 per cent. Tech-heavy ChiNext gained 0.6 per cent.

“The announcements came relatively suddenly, that the scrutiny was extended to data security from antitrust,” said Willer Chen, analyst at Forsyth Barr in Hong Kong. “The impact is negative and more on sentiment, although the impact of actual business and operations is not big. Investors think there are still regulatory uncertainties and it‘s hard to grasp its future direction.”

The Cyberspace Administration of China on Monday launched cybersecurity reviews into three more companies, including US-listed online recruiting service Kanzhun, and the “Uber-for-trucks” operator known as Guiyang Huochebang Technology and Full Track Logistics Information. The latter two are part of newly-listed Full Truck Alliance.

The new action came hours after the powerful agency ordered Didi Chuxing off the nation’s app stores late Sunday, and four days after the ride-hailing firm raised US$4.44 billion in a stock offering in New York.

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Vitasoy International, a Hong Kong-based beverage maker, plunged 12 per cent to HK$25.95, the most in 15 months, following a backlash triggered by a leaked internal memo seen as sympathetic to an employee who assaulted a police officer on July 1. The slump erased US$475 million in its market value.

Elsewhere, growth of China’s non-manufacturing industry slowed to a 14-month low in June as the more infectious Delta strain flare-ups in southern Guangdong province weighed on the economy.

The Caixin/Markit services purchasing managers’ index fell to 50.3 in June, the lowest since April 2020 and down from 55.1 in May. It held just above the 50-mark, which separates growth from contraction on a monthly basis.

In mainland, carbon reduction related stocks surged, with 22 electric-vehicle related firms surging by the daily caps. Jiangsu Jiuwu Hi-Tech soared by 20 per cent.

Among debutants, ShuYu Civilian Pharmacy Corp surged 234 per cent from its offering price of 8.86 yuan and Guizhou Aviation Technical Development jumped 241 per cent from 11.48 yuan. Zylox- Tonbridge Medical Technology Co appreciated 41 per cent in Hong Kong from HK$42.70.

Additional reporting by Zhang Shidong

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