Hong Kong stocks slide as losses in Chinese technology trio snowball to US$254 billion in two days on antitrust concerns

Hong Kong stocks retreated amid unforgiving losses in large-capitalised Chinese technology stocks, challenging bulls who drove the market to a four-month high this week on the back of US election outcome and Covid-19 vaccine promise.

The Hang Seng Index fell 0.3 per cent to 26,226.98, after reaching the highest level since July 6 on Tuesday. The Shanghai Composite Index retreated 0.5 per cent for its second day of declines.

The 30-member Hang Seng Tech Index slumped 6.2 per cent from record-high, bringing this week’s slump to 8.4 per cent. Technology stocks extended losses after China released a draft antitrust guideline on Tuesday to rein in internet-platform companies from monopolistic practices, wiping almost HK$2 trillion (US$253.8 billion) in market value of the China’s Big Three tech giants over two days.

Alibaba Group Holding, the owner of this newspaper, crashed 9.8 per cent to HK$248.40, while Tencent Holding slid 7.4 per cent to HK$551 and Meituan retreated 9.7 per cent to HK$271.

“Investors are worried about the risk to technology stocks from the enactment of the antitrust guidelines,” said Stanley Chan, director of research at Emperor Securities. “Around the world, we’re seeing a trend for investors to rotate out of technology stocks into traditional economy stocks.”

The antitrust guideline, if strictly enforced, “could weaken the bargaining power of those big platforms in dealing with merchants,” Nomura analysts Jialong Shi and Thomas Shen wrote in a November 10 report. “We believe enforcement of the new guidelines would not be easy, as monopolistic practices are usually conducted in a very elusive manner such that it is often difficult to find solid evidence to take action.”

The Hang Seng Index had rallied by more than 1 per cent on Tuesday after Pfizer released positive test results from its Covid-19 vaccine candidate trials. That may still be months away from global deployment, analysts said.

“Equity markets are more mixed today as Monday‘s Pfizer vaccine news fades while markets reassess,” said Stephen Innes, chief global markets strategist at Axi. “Investors may wonder to what extent markets will keep rallying given the known logistical challenges of distribution and still some hurdles for approval.”

With airlines facing a bleak winter and a full recovery seen only in 2024, more airlines are likely to collapse

The optimism has encouraged the Hong Kong government to announce a travel-bubble plan with Singapore, which will now officially kick off on November 22. The government last month allowed residents returning from mainland China to skip quarantine requirements.

Cathay Pacific stock gained 1.4 per cent, reversing from an earlier slide of 3.3 per cent. The stock soared 14.1 per cent on Tuesday.

Bourse operator Hong Kong Exchanges & Clearing fell 4 per cent to HK$365.40. The company said on Wednesday that it recorded its biggest ever quarterly profit of HK$3.34 billion (US$430.8 million) in the third quarter. Higher turnover and record Stock Connect revenue as well as a wave of US-listed mainland Chinese technology IPO boosted its results.

Two stocks started trading after their initial public offerings.

Bright Future Technology, a mobile advertising company, rose 31.8 per cent to HK$1.45 from its IPO price of HK$1.10 in Hong Kong. Semiconductor processing company Guangdong Leadyo IC Testing surged 298 per cent to 62.53 yuan from its listing price of 15.72 yuan in Shanghai.