Hang Seng tech index slipped 5% to its lowest since November
Tech giants, from Tencent Holdings to Alibaba Group Holding, have plunged after U.S. regulators re-launched threats to dismiss China’s largest companies from U.S. stock exchanges, heightening fears of intensifying domestic antitrust repression. Tencent and Alibaba slipped more than 5% in Hong Kong on Thursday before cutting losses, joining a US sale that wiped out more than 20% of Chinese tech names, including Tencent Music Entertainment and iQiyi Inc., Netflix-like streaming. of Baidu Inc. subsidiary. The Hang Seng technology index slipped as much as 5 percent to its lowest since November.
The losses follow a warning from the Securities Exchange Commission that it is taking action to force accounting firms to let U.S. regulators review financial audits of foreign companies – the penalty for non-compliance being expulsion from stock exchanges. The threat has heightened sentiment in China’s tech giant just as Beijing expands its crackdown on the country’s biggest companies, fearing their growing influence after years of relatively free expansion.
“Sentiment was hurt after Chinese tech stocks crashed overnight on the Nasdaq,” as local reasons sped up sales including lack of upside surprises in Tencent earnings and concerns regarding government regulations on the sector, said Daniel So, analyst at CMB International.
Bloomberg News reported on Wednesday that the Chinese government had offered to form a joint venture with local tech giants that would oversee the lucrative data they collect from hundreds of millions of consumers. The preliminary plan, led by the People’s Bank of China, would mark a significant escalation in attempts by regulators to tighten their grip on the country’s internet industry. Tencent executives have sought to mitigate the impact of Beijing’s heightened surveillance after reporting revenue growth that barely lived up to expectations.
“The main reason is still valuation,” said Linus Yip, analyst at First Shanghai Securities. “Even after such a drop, the industry still isn’t cheap. I don’t think tech stocks will resume their uptrend anytime soon. Any bad news will trigger further sales, whether it’s the fall of the Nasdaq or Chinese regulations. “
(Except for the title, this story was not edited by NDTV staff and is posted from a syndicated feed.)