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China’s tech crackdown reaches US$616 billion in damage or larger than Thailand’s stock market as money managers wrong-footed
- Tech stocks sank 3.7 per cent in Hong Kong, extending the slump from February 17 peak to 33 per cent or at least US$616 billion in damage
- Fund managers from JPMorgan to BlackRock have differed on the extent of current regulatory crackdown since late last year
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Zhang Shidongin Shanghai
Tech stock investors are facing one of their biggest tests of nerves as Chinese regulators slammed the market with rapid-fire regulatory actions against internet-platform operators over security and data privacy issues.
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The Hang Seng Tech Index slumped for a seventh day in Hong Kong, sinking 3.7 per cent to a nine-month low. The broader market tumbled for an eighth day, losing 2.9 per cent to reach the lowest level this year.
The 30-member gauge tracking industry leaders like Alibaba Group Holding and Tencent Holdings has now lost 33 per cent from the peak on February 17, wiping out at least US$616 billion of capitalisation. That exceeds Thailand’s US$549 billion equity market, the biggest in Southeast Asia.
China’s cyberspace agency on Sunday ordered ride-hailing firm Didi Chuxing off the nation’s app stores on national security grounds, startling global investors barely days after it went public as Didi Global Inc in New York on June 30. The decision is seen as a widening crackdown on the sector since it foiled Ant Group’s blockbuster stock offering in November on antitrust issues.
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“The market needs to re-evaluate the sector on the backdrop of all these new regulations,” said Luo Di, a Shanghai-based portfolio manager at UBS Asset Management. “The valuation will definitely be revised downward on the back of the tightening rules.”
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