China tech shares wipe out gains as traders stay jittery

[HONG KONG] Shares of some of the biggest China tech firms trimmed gains in early afternoon trading on Thursday (Mar 10), underscoring high investor angst in a sector mired in regulatory crackdowns.

Hong Kong's Hang Seng Tech Index traded 0.1 per cent higher as at 2.45 pm local time, cutting gains of as much as 4.4 per cent earlier. The move comes after a fresh bout of volatility hit Chinese stocks a day earlier, with key benchmarks tumbling more than 3 per cent before paring at the close. Investors have been burned repeatedly buying dips in Chinese tech giants such as Alibaba Group Holding and Tencent Holdings in the past year. Beijing's clampdown on private enterprise appeared to intensify in recent weeks after authorities required food delivery platforms to cut fees they charge restaurants and warned of risks in investing in products linked to the metaverse.

Since its February 2021 peak, the China tech gauge has slumped nearly 60 per cent. Adding to the fragile sentiment are concerns about a potential interest rate hike from the US Federal Reserve next week and elevated commodity prices fuelled by the war in Ukraine.

"Investors may be looking to sell growth names into the brief rallies to reduce their risk exposure, given multiple headwinds including Russia and the upcoming rate hikes," said Vey-Sern Ling, a senior analyst at Union Bancaire Privee.

Traders are also looking ahead to earnings to gauge the health of the sector. E-commerce giant JD.com is set to report after close on Thursday. A measure of volatility on the Hang Seng Index surged to its highest level since May 2020 earlier this week. BLOOMBERG