Chinese tech stocks drop to new crackdown lows, led by Alibaba

[HONG KONG] Chinese technology stocks dropped for a third straight session amid fresh worries over Beijing's regulatory plans for the sector.

The Hang Seng Tech Index fell as much as 2.7 per cent on Tuesday (Feb 22), on course for its lowest close since inception in July 2020.

Alibaba Group led declines following a Bloomberg report that authorities are kicking off another round of checks on its fintech business arm. Tencent dropped as much as 3 per cent, extending recent declines even after the company denied it's facing a new crackdown on its core businesses. Meituan dropped to the lowest since July 2020 after Beijing on Friday ordered the delivery platform to cut fees.

The declines come amid weakness in the broader global equity market on escalating tensions in Ukraine.

The 3-day drop in China's tech shares is its biggest since July as investor concern mounts that a new wave of crackdowns could be in the pipeline for the sector. The broader Hang Seng Index has more than halved from last year's February peak following Beijing's year-long anti-monopoly campaign.

The question is "how much large internet companies' earnings will be impacted in the long term if they are required to take increasing social responsibility," said Jian Shi Cortesi, a portfolio manager at GAM Investment Management. There are not enough details currently to make a conclusion yet, she added. BLOOMBERG