China’s technology stocks fell to new lows on Friday and Hong Kong’s benchmark index hit nearly a ten-month high as a relentless series of Chinese regulatory crackdowns crushed investor confidence.
More than $ 560 billion in market value has been wiped out of Hong Kong and mainland China trade in a week as funds capitulate to once-favored shares, without knowing which sectors regulators will target.
The Hang Seng fell 1.8 percent and its 5.8 percent weekly drop was the largest since the peak of a pandemic in financial markets in March 2020.
Shares in Shanghai also fell, while investors sold corporate risk debt and the Chinese currency. The yuan was on the verge of suffering the biggest weekly loss in two months as investors rushed to safety amid global coronavirus concerns.
U.S.-listed shares of technology-related companies in the U.S. gained ground as bargain hunters took advantage of recent sales stemming from Beijing’s ongoing regulatory crackdown, which this week has wiped out half a trillion dollars. dollars from Chinese markets.
Alibaba Holding Group, Tencent Music Entertainment Group, Didi Global and iQiyi advanced from 1% to 4.5%.
“There’s not really a trigger, but a lot of snippets that are added to the narrative to get away from China,” said Dave Wang, portfolio manager at Nuvest Capital in Singapore.
“Almost every day you have negative news coming out, so it gives the impression that there is no end in sight.”
Just this week, China announced tougher rules on competition in the technology sector, summoned executives from real estate developer Evergrande to warn them to reduce the firm’s massive debt, and state media reported on imminent regulations to to alcoholic beverage manufacturers, a favorite spot for foreign fund managers.
After crackdowns ranging from steelmaking to e-commerce and education, moves are undermining faith in a market that seems to still not find a flat after months of selling.
The Shanghai Composite fell 1.1% to its lowest close in more than two weeks on Friday and blue chips fell 1.9%, and liquor makers led the losses.
China Telecom was an infrequent bright spot and rose in its debut in Shanghai.
The epicenter of the sale has been the technology sector, which had been popular with foreign investors who now fear they may not be able to quantify regulatory risk and sell it en masse.
Hong Kong’s Hang Seng Tech index, made up of many one-time loved ones, fell 2.5 percent on Friday to a new record and has fallen 48 percent since February.
Hong Kong shares of e-commerce titanium Alibaba fell 2.6 percent to a record low and have halved since the October high. Internet giant Tencent hit a 14-month low and food provider Meituan hit a one-year low.
“Right now there’s a herd mentality,” said Louis Tse, general manager of Hong Kong Wealthy Securities brokerage. “People see a person selling and then do the same.”
As a result, Alibaba now controls its lowest price-to-earnings ratio since it was listed in New York in 2014 and Tencent, the lowest in more than eight years.
“Tencent and Alibaba wouldn’t be trading around twenty times if the overall mood around them was optimistic,” said Tariq Dennison, CEO of GFM Asset Management in Hong Kong, who was actually a buyer on both Fridays. .
Added to the regulatory concerns are concerns about China’s economic momentum loss of momentum and rising debt risks, as the data point to a slowdown in demand and factory production and suggest that the authorities are repressing at a delicate time.
The persistence of policymakers with falling hot real estate prices, for example, has markets on the brink and corporate credit fell even further on Friday with news that regulators had scolded Evergrande, heavily indebted.
The yuan has fallen in its 200-day moving average against the general growth of the US dollar and has weakened after the psychological mark of 6.5 per dollar, reaching a three-week low of 6,5059 during the land trade on Friday.
The Hong Kong dollar is nearing its weakest level in a year and a half, which also suggests that the money will leave the city.