Chinese Tech Stocks in Hong Kong Plunge amidst Regulatory Pressure
Due to the decline in stocks of Chinese technology and education companies under Hong Kong stocks fell sharply in trading on Monday afternoon. The decline in Chinese stocks was a result of regulatory pressure and the unfavorable start of the China-US summit.
The Asia-Pacific markets at large mixed with mainland China also witnessing stocks decline.
Hong Kong’s stock market index Hang Seng Index dropped 3.24%, outperforming the regional decline.
On Monday afternoon, the share price of Tencent, a Chinese technology giant listed in Hong Kong, fell 7.61%. Alibaba shares fell by 5.17%, and Meituan shares on the other hand dropped 9.15%. With these dips in the shares, the Hang Seng Tech index witnessed a plunge of 6.58%.
The loss occurred after Tencent was ordered by the Chinese antitrust department to give up its exclusive music licensing rights. The company was additionally also fined for anti-competitive behavior, signifying progress in Beijing’s continuing crackdown on its national Internet giants.
As the authorities in China tightened restrictions on the education sector, shares of private education companies listed in Hong Kong have also fallen. The share prices of New Oriental Education & Technology Group, China Beststudy Education Group, and Koolearn Technology each saw a decline of more than 30%.
As stocks in Mainland China dropped, SSE Index Composite dropped 2.42% and SZSE Composite Index was down 2.963%.
The geopolitical tensions between China and the US may have affected investor sentiment. A high-level meeting between the two superpowers and leading economies rather started off on a sour note
According to a press release by the Chinese Ministry of Foreign Affairs, the Chinese vice Foreign Minister called the China-US relationship in a state of deadlock. According to the Minister, the relationship between the two countries wasn’t the best and would face serious difficulties.
In other trading news, the South Korean Composite Index Kospi fell 0.61%. On the other hand, S&P/ASX in Australia mostly remained unchanged.
When Japanese stocks resumed trading after the holidays on Thursday and Friday, they disrupted the overall regional trend. The Nikkei 225 Index rose 1.05%, and the Topix Index rose 1.1%.
As per official data, the manufacturing output of Singapore fell 3% last month on a seasonally attuned monthly basis.
Investors continue to pay attention to the Covid situation in Asia because it will affect market sentiment. According to local South Korean news agency Yonhap, the second-highest level virus constraints will be imposed on areas outside the metropolitan area. According to Kyodo News, in other places, the daily number of coronaviruses in Tokyo has surpassed 1,000 for six consecutive days.
According to Reuters, Indonesia had to extend its Covid restriction by a week after the upsurge in Covid cases. The country is one of several countries in Southeast Asia coping with the resurgence of Covid-19.