The Hang Seng Technology Index slid as much as 5 per cent to its lowest since NovemberTech giants from Tencent Holdings to Alibaba Group Holding dived after United States regulators revived threats to toss China's largest corporations off United States bourses, compounding concerns of a widening domestic antitrust crackdown.
Tencent and Alibaba slid more than 5 per cent in Hong Kong Thursday before paring losses, joining a United States selloff that wiped more than 20 per cent off Chinese tech names including Tencent Music Entertainment and iQiyi Inc., Baidu Inc.'s Netflix-like streaming subsidiary.
The Hang Seng Technology Index slid as much as 5 per centto its lowest since November.The losses followed a warning from the Securities Exchange Commission that it's taking steps to force accounting firms to let United States regulators review the financial audits of overseas companies -- the penalty for non-compliance being ejection from exchanges.
That threat worsened sentiment in China's giant tech sector just as Beijing is widening a crackdown on the country's largest corporations, fearful of their growing clout after years of relatively unfettered expansion."Sentiment got hurt after Chinese technology stocks slumped overnight on Nasdaq," while local reasons accelerated the selloffs, including a lack of upside surprises in Tencent earnings and worries about government regulation on the sector, said Daniel So, a CMB International analyst.On Wednesday, Bloomberg News reported China's government has proposed establishing a joint venture with local technology giants that would oversee the lucrative data they collect from hundreds of millions of consumers.
The preliminary plan, which is being led by the People's Bank of China, would mark a significant escalation in regulators' attempts to tighten their grip over the country's internet sector.
Tencent executives sought to tamp down the impact of Beijing's heightened scrutiny after reporting revenue growth that barely met expectations."The major reason is still valuation," said Linus Yip, First Shanghai Securities analyst.
"Even after such a big drop, the sector is still not cheap.
I don't think the tech stocks will resume upward trend any time soon.
Any bad news will trigger further selloffs, be it Nasdaq plunge or news about China's regulation."(Except for the headline, this story has not been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)