Chinese technology stocks have fallen sharply than U.S. countries

The Hang Seng Tech Index, which tracks 30 companies, including Chinese Internet giants Tencent Holdings Ltd.

TCEHY 4.46%

and Alibaba Group Holding Ltd., and smartphone maker Xiaomi Corp.

1810 -0.91%

—It closed on Tuesday at its lowest level in 2021 and is now in a bear market, defined as a drop of at least 20% from the recent high.

In comparison, the Nasdaq Composite closed 10.5% lower on Monday than the recent index high on February 12th.

Money managers say the trigger for the fall in the U.S. and Asian markets was similar: a rapid and unexpected rise in Treasury bond yields, which made the shares of fast-growing companies less attractive and that some investors would move from technology to banking, energy and others less volatile stocks. China’s big technology agents have been more successful, because a flood of money from investors in mainland China had sharply raised stock prices and valuations.

“It’s hard to name the fund, but we see it as a healthy correction, and the market was mandatory,” said Nicholas Yeo, who oversees China’s shares in Aberdeen Standard Investments in Hong Kong. He said the long-term growth prospects of the country’s internet and technology giants remain intact, but that their shares are vulnerable to large fluctuations because they were one of the main beneficiaries of excess liquidity in the markets during the coronavirus pandemic.

Just a month ago, Meituan, a Beijing-based company that runs a popular shopping, food delivery and reservation app, was ranked at the forefront as China’s third-largest company with a market capitalization. in excess of $ 300 billion. Investor enthusiasm for Meituan’s recent expansion in the mass purchase of groceries in China led to a rapid build-up of its shares, although the company only generates a small profit.

Meituan has been one of the biggest victims of the recent sale, which has reduced its value by a third since 17 February. The shares were one of the most popular purchases by investors in mainland China via the Stock Connect trade link to buy listed shares. in Hong Kong. The exits via this link have recently been retrieved.

Armies of individual investors who have become more active users of mobile commerce apps have also increased market volume.

As a result, “when things start to go up, they go up very quickly. But when they start to go down, everything quickly falls apart as well, “said Wei Wei Chua, portfolio manager at Mirae Asset Global Investments in Hong Kong. He said his company has become cyclical financial names, such as insurers. and defensive moves, such as utility companies.

Ken Peng, head of investment strategy in Asia and the Pacific at Citi Private Bank, said that as the world gradually recovers from the coronavirus pandemic, technology stocks could fall into disfavor for investors. “There will be less demand for technology,” he said, “and more demand for leaving home.”

Many investors suffered losses in the quick sale. Huang Xiaohu, a 35-year-old technology entrepreneur in Shenzhen, previously benefited from Kuaishou Technology’s strong business debut,

an operator of a popular short video application in China. After selling the shares he received in the company’s initial public offering, he decided to buy them again after a recent fall, but the shares continued to fall and he is sitting on paper losses equivalent to more than 10,000 dollars.

“I do not want to talk about values ​​anymore. My heart is broken, ”said Huang, who also owns Alibaba shares listed in Hong Kong, with a paper loss of around 20%. He said he plans to hold both actions in hopes of a recovery.

Write to Xie Yu to [email protected] and Joanne Chiu to [email protected]