Shares of Alibaba, Tencent, Meituan take a hammering in Hong Kong as Beijing clips Ant’s wings, cracks down on monopolies

The Hang Seng Index declined 0.3 per cent on Monday, as investors watched for signals from Beijing about moves to further rein in the tech sector, and Covid-19 cases flared

E-commerce giant Alibaba Group plunged 8 per cent even as it increased share buy-backs, Meituan was down 6.9 per cent and Tencent dived 6.7 per cent

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The Chinese government has launched a crackdown on the dominance of technology giants. Photo: Shutterstock

Published: 10:56am, 28 Dec 2020Updated: 4:59pm, 28 Dec 2020

Hong Kong stocks slipped on Monday as investors assessed the impact of Beijing’s clamp down on monopolistic behaviour in the technology sector, while coronavirus infectionsincreased in both mainland China and the city. Major tech stocks took a pounding.

The Hang Seng Index lost 0.3 per cent to close at 26,314.63. The Shanghai Composite Index finished 0.02 per cent higher at 3,397.29. Both gauges had fluctuated between gains and losses earlier in the day.

Investors are closely monitoring signals from Beijing about antitrust rules after the government recently stepped up its regulation of the country’s internet and technology sectors. Earlier this month the Politburo, the Communist Party’s top decision-making body, vowed to intensify its antitrust efforts and prevent “disorderly capital expansion”.

At the weekend Chinese financial regulators demanded Ant Group, an Alibaba affiliate and the world’s largest fintech company, rein in the influence of technology on its financial services. Ant must return to its origins in online payments and prohibit irregular competition, protect customers’ privacy in operating its personal credit rating business and establish a financial holding company to manage its businesses, the People’s Bank of China’s deputy governor Pan Gongsheng said in a statement on Sunday.

Alibaba Group Holding plunged 8 per cent to HK$210, the lowest level since June 30, even after it announced it would increase its repurchasing of shares to US$10 billion from US$6 billion through to the end of 2022. The company owns the South China Morning Post.

Affiliates also suffered, with film studio Alibaba Pictures dropping 2.1 per cent to HK$0.92, and Alibaba Health plummeting 13.1 per cent to HK$20.55 in Hong Kong.

“The shock to the market from the probe into Alibaba is big, as investors are doubting or unsure whether regulators are targeting only Alibaba or [antitrust in general]. If the latter, the hit will be huge as tech giants in Hong Kong such as Tencent and Meituan could fall into the scope,” said Alan Li, portfolio manager at Atta Capital in Hong Kong.