Chinese tech stock rout deepened, slashing billions of dollars from the likes of Alibaba Group Holding and Tencent Holdings in Hong Kong, on heightened concerns about an industry crackdown, Covid-19 outbreaks, and China’s position on the Ukraine conflict. Losses spiralled after JPMorgan Chase downgraded 28 Chinese internet stocks including Alibaba, Tencent Holdings and Meituan to underweight, calling them “uninvestable” over the next six to 12 months due to rising geopolitical and macro risks, Bloomberg reported. The blue-chip Hang Seng Index fell 5.7 per cent to 18,415.08 at the close of Tuesday trading, the lowest level in 10 years and bringing the losses this year to 21 per cent. The Tech Index sank 8.1 per cent, following an 11 per cent plunge on Monday. The Shanghai Composite Index lost 5 per cent, the most since a 7.7 per cent rout on February 3, 2020. Alibaba, the owner of this newspaper, slipped 12 per cent to another record-low of HK$71.25, while Tencent retreated 10.2 per cent to HK$298 amid concerns about a large penalty. JD.com tumbled 10.1 per cent to HK$167.90. “With the current situation, it is too rough to give a valuation to the internet companies, considering the geopolitical risks [surrounding Russia and Ukraine] and the conflict between China and the US [on delisting concerns],” said UOB Kay Hian analyst Julia Pan. The gauge tracking 30 of China’s tech leaders has lost 39 per cent this year, wiping out HK$4.4 trillion (US$566 billion) of market value. More than US$1 trillion was lost last year as a result of an antitrust crackdown on internet-platform operators. Today’s sell-off followed another dismal overnight showing in US-traded Chinese stocks. The Nasdaq Golden Dragon China Index lost 11.7 per cent, bringing the slide over three days to 29 per cent. “Due to rising geopolitical and macro risks, we believe a large number of global investors are in the process of reducing exposure to the China internet sector, leading to significant fund outflows,” JPMorgan analysts said in a report cited by Bloomberg. The sell-off may continue without valuation support, they added. The lone bear on Alibaba sees ‘no point catching a falling knife’ as tech investors not rewarded for embracing China risk JPMorgan downgraded all 28 Chinese internet stocks under its coverage to neutral or underweight in a sweeping move, calling them unattractive and that the “sector-wide sell-off might continue given the lack of valuation support in the near term.” It maintained Kuaishou as the only overweight. The US bank’s analyst Alex Yao cut his 12-month price targets for Alibaba to US$65 and HK$63 for its US and Hong Kong-traded shares, according to Bloomberg data. He became the second bear on the e-commerce group. Manuel Muhl of DZ Bank called a sell on Alibaba in July 2021. Meanwhile, China has rejected suggestions that Russia has asked the nation for equipment support in the invasion of Ukraine, as claimed by the US. Stocks sold off amid worries about widening sanctions on parties that aided the war. Still, policymakers have done little to shore up the market. The central bank on Tuesday kept the medium-term lending facility rate unchanged at 2.85 per cent, and the seven-day rate at 2.10 per cent, against market consensus for cuts to address challenges brought on by the Covid-19. Elsewhere, Chinese authorities are grappling with the worst flare-up in Omicron cases since the Wuhan outbreak in early 2020 with the tech hub of Shenzhen in lockdown. Hundreds of flights to Shanghai were cancelled while officials remained tight-lipped on the possibility of a complete lockdown of China’s commercial hub. Three firms kicked off their trading debuts. iSoftStone Information Technology, a digital technology service firm based in Beijing, slumped 17 per cent. Zhuhai Comleader Information Science & Technology, which produces and sells communication network equipment, retreated 11 per cent. Chengdu Lihang Technology Company, an aircraft parts manufacturer, jumped 44 per cent. Markets in Asia Pacific were mixed on Tuesday. Japanese shares rose 0.2 per cent, while Australian and Koreans shares fell at least 0.7 per cent.