Alibaba, US-listed China stocks drop amid probe report

US-LISTED China stocks tumbled on Thursday (Jul 14), leaving them poised for their steepest weekly losses since May, as a report that Alibaba Group Holding faces an inquiry in China in connection with a data theft case renewed regulatory concerns broadly.

The Nasdaq Golden Dragon China Index fell 2.2 per cent, bringing its weekly drop to 7.7 per cent. The move was led by Alibaba, which fell 4.9 per cent, its fifth consecutive day of decline. Technology peers Baidu and JD.com slid 2.2 per cent and 1.1 per cent, respectively, while electric vehicle stock Nio lost 0.2 per cent.

Executives from Alibaba Group's cloud division have been summoned for talks by authorities in Shanghai in connection with the theft of a vast police database, one of the nation's largest cybersecurity breaches, according to the Wall Street Journal.

The news, coupled with reports Monday that China hit tech giants with regulatory fines, is denting investors sentiment on the group after a rally in June.

In June, the Golden Dragon Index soared 16 per cent, its best month since 2019, with a string of analysts calling a bottom in the group, as the government appeared to step back from regulatory crackdowns on the tech industry and continued to roll out supportive measures. The rally then paused amid jitters over regulatory uncertainty and fresh Covid-19 lockdown risks. The Golden Dragon Index is still about 17 per cent lower this year.

This week, the Hang Seng Tech Index entered a technical correction, with analysts questioning if fresh probes on Internet giants would trigger another downturn in the sector. BLOOMBERG