The Hang Seng technology index fell to 5% to its lowest level since November
Tencent Holdings technical giants at Alibaba Group Holding sank after US regulators recovered threats to launch China’s largest companies from US stock exchanges, exacerbating concerns about widespread antitrust crackdown national. Tencent and Alibaba fell more than 5% in Hong Kong on Thursday before matching losses, adding to a sale in the United States that removed more than 20% of Chinese technology names, including Tencent Music Entertainment and iQiyi Inc., the Netflix-like broadcast from Baidu Inc. branch. The Hang Seng technology index fell to 5% to its lowest level since November.
The losses followed a warning from the Stock Exchange Commission that it was taking steps to force accounting firms to let U.S. regulators review the financial audits of overseas companies; the penalty for non-compliance is expulsion from the stock exchanges. This threat worsened sentiment in China’s tech giant, just as Beijing is expanding its crackdown on the country’s largest corporations, fearful of its growing influence after years of relatively free expansion.
“Sentiment hurt after Chinese tech stocks fell overnight on the Nasdaq,” while local reasons accelerated sales, including a lack of surprises on the rise in Tencent’s earnings and concerns about government regulation of the sector, said Daniel So, an analyst at CMB International.
On Wednesday, Bloomberg News reported that the Chinese government has proposed establishing a joint venture with local technology giants that would monitor 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, will mark a significant escalation in regulators ’attempts to strengthen control of the country’s Internet sector. Tencent executives tried to reduce the impact of Beijing’s intense scrutiny after reporting revenue growth that barely met expectations.
“The main reason remains valuation,” said Linus Yip, senior analyst at Shanghai Securities. “Even after such a big drop, the sector is still not cheap. I don’t think technology stocks will pick up the uptrend soon. Any bad news will lead to new sales, whether it’s a fall on the Nasdaq or news about the regulation of China “.
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