Hong Kong: Stocks tumble, tech in crosshairs again

[HONG KONG] Tech giants led losses in Hong Kong on Thursday after gaming titan Tencent warned Beijing would likely expand its crackdown on the sector, while traders were also hit by expectations the Federal Reserve will start tightening monetary policy by the year's end.

The Hang Seng Index tumbled 2.13 per cent, or 550.68 points, to 25,316.33.

The Shanghai Composite Index shed 0.57 per cent, or 19.73 points, to 3,465.55, but the Shenzhen Composite Index on China's second exchange added 0.20 per cent, or 4.74 points, to 2,417.23.

The sell-off in Hong Kong and Shanghai reflected a wider retreat across the world after the Fed released minutes from its July meeting showing most board members agree on tapering policy in the next few months as the economy recovers.

The move, which analysts suggest could begin in November or December, would begin chipping away at a key pillar of the rally world markets have enjoyed for more than a year.

While most markets around Asia were in negative territory, Hong Kong's problems were exacerbated by renewed fears that Beijing has not finished with its regulatory moves against certain industries, most notably tech.

The sector has already had a torrid time this year as leaders look to tighten their grip on firms they consider to have gained too much power, citing antitrust and national security issues.

On Wednesday, gaming firm Tencent, China's biggest company, announced relatively healthy earnings but told investors to prepare for further curbs that will likely further hit business models and earning power.

"In the near future, more regulations should be coming," president Martin Lau said. "This should be expected because the regulation has been quite loose over an industry like the Internet, considering its size and the importance."

Tencent ended Thursday more than 3 per cent down, while e-commerce behemoth Alibaba, which was the first firm to feel the heat of Chinese authorities, fell more than 5 per cent to its lowest level since listing in November 2019.

Alibaba's HK$162.10 end price is almost half the record HK$309.40 touched in October last year.

Among other tech firms, Lenovo tanked 5.9 per cent and AAC Technologies shed 3 per cent.

"Tencent management noted that there was 'a lot more to come' on the regulation front across multiple segments from different regulators. This is clearly not ideal," said Bernstein analyst Robin Zhu.

However, there were also sizeable losses in other parts of the Hang Seng Index, with oil giants slammed by a plunge in oil prices that has been caused by demand concerns in light of the spread of the Delta Covid variant.

PetroChina plunged 5.3 per cent, CNOOC shed 1.8 per cent and Sinopec dived 3 per cent.

AFP