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China tech rout: Hong Kong market sinks after JPMorgan calls sector ‘uninvestable’ as global funds shun macro, geopolitical risks

  • Losses snowballed as JPMorgan cites macro and geopolitical risks while global funds prepare to flee China internet bets
  • Hang Seng Index hit a new six-year low as more than US$460 billion of market value from tech stocks evaporated this year; Alibaba crashed by a record 12 per cent

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An electronic board showing the Hang Seng Index in Central, Hong Kong on March 15, 2022. Photo: FP
Cheryl Heng
Chinese tech stock rout deepened, slashing billions of dollars from the likes of Alibaba Group Holding and Tencent Holdings in Hong Kong, on heightened concerns about an industry crackdown, Covid-19 outbreaks, and China’s position on the Ukraine conflict.

Losses spiralled after JPMorgan Chase downgraded 28 Chinese internet stocks including Alibaba, Tencent Holdings and Meituan to underweight, calling them “uninvestable” over the next six to 12 months due to rising geopolitical and macro risks, Bloomberg reported.

The blue-chip Hang Seng Index fell 5.7 per cent to 18,415.08 at the close of Tuesday trading, the lowest level in 10 years and bringing the losses this year to 21 per cent. The Tech Index sank 8.1 per cent, following an 11 per cent plunge on Monday. The Shanghai Composite Index lost 5 per cent, the most since a 7.7 per cent rout on February 3, 2020.

Alibaba, the owner of this newspaper, slipped 12 per cent to another record-low of HK$71.25, while Tencent retreated 10.2 per cent to HK$298 amid concerns about a large penalty. JD.com tumbled 10.1 per cent to HK$167.90.

“With the current situation, it is too rough to give a valuation to the internet companies, considering the geopolitical risks [surrounding Russia and Ukraine] and the conflict between China and the US [on delisting concerns],” said UOB Kay Hian analyst Julia Pan.

The gauge tracking 30 of China’s tech leaders has lost 39 per cent this year, wiping out HK$4.4 trillion (US$566 billion) of market value. More than US$1 trillion was lost last year as a result of an antitrust crackdown on internet-platform operators.

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