Hong Kong stocks sink by most in 14 months as tech sell-off deepens after China unleashes new measures against Tencent, private education firms
- Hang Seng Index tanked by most since May 2020 as tech wreckage leaves investors with huge losses; Chinese stocks suffer biggest slide since March
- Education stocks plunge as China bans weekend and holiday lessons and halts new tuition centres; Tencent saw the biggest retreat in most in a decade
The Hang Seng Index plunged 4.1 per cent to 26,192.32 at the close of Monday trading, the most since May 22 last year. The gauge declined 3.8 per cent so far this year. The benchmark fell 2.7 per cent last week after a bunch of so-called education technology and tutoring firms crashed again, after losing as much as 41 per cent on Friday following a ban on for-profit lessons and classes.
The Hang Seng Tech Index crashed 6.6 per cent after losing 3 per cent on Friday, the gauge’s worst back-to-back thrashing since November. Tencent tumbled 7.7 per cent, the most since a 9.3 per cent loss in October 2011, Bloomberg data showed. Meituan tumbled 14 per cent and Alibaba Health slid 11.5 per cent.
Stocks in mainland China markets also tanked, the CSI 300 Index of biggest stocks in Shenzhen and Shanghai closing 3.2 per cent off in the worst sell-off since March 8. The Shanghai Composite Index declined 2.3 per cent.
“The regulation is getting increasingly tighter, it will be hard for these companies’ profit to grow,” said Castor Pang, head of research at investment services firm Core Pacific-Yamaichi. “Investors are concerned that the tightening of regulation could be spread to other industries, so they are relatively pessimistic on the market in the short term.”
Other edu-tech firms also saw a huge beating. Scholar Education and China New Higher Education both slumped by 45 per cent and 12 per cent respectively, adding to at least US$5.8 billion sell-off of peers on Friday. In mainland markets, Offcn Education Technology, Beijing Kaiwen Education and XueDa XiaMen Education plunging by the daily cap of 10 per cent limit.
“We do not rule out the possibility that if the policy headwind continues, downside to fair values are possible,” Jenny Tsai, senior equity analyst at Morningstar, said in a report. “In the worst-case scenario, we would expect further industry consolidation, with more players exiting the market.”
The 30-member Hang Seng Tech Index has lost more than US$600 billion of market value since the gauge peaked in mid-February under the relentless clampdown by regulatory hawks in Beijing. The index has lost 16 per cent since its peak in mid-February, and last week fell
Elsewhere, Chinese hotpot chain Haidilao tumbled 16.7 per cent to HK$34.70 after its interim earnings missed the expectations of the management because of higher operating expenses and slower payback and return on investment.
Additional reporting by Zhang Shidong