US: China stocks in resume slide after brutal sell-off in Asia

[NEW YORK] Chinese stocks listed in the US endured another day of selling after policymakers in China unleashed a fresh round of proposed regulations.

American depositary receipts for technology giants including Tencent Holdings, Alibaba Group Holding and JD.com all tumbled more than 3 per cent at the trading open on Thursday. This comes after a painful day of trading for Chinese tech firms listed in Asia, which saw the Hang Seng Tech Index briefly fall to the lowest level since its inception in July 2020 and Alibaba sink to a record low in Hong Kong.

The slump comes after China said it is studying proposals to further ensure the rights of drivers who work for online companies and to step up oversight of the live streaming industry. Didi Global dropped as much as 5.6 per cent, extending its decline for a second day.

"The China regulatory campaign isn't showing any signs of abating, and this remains a huge drag not only on that country's tech stocks, but increasingly other markets as well," said Vital Knowledge founder Adam Crisafulli.

Investor sentiment has been crushed in recent weeks as Beijing's sweeping list of crackdowns has grown to target everything from big-tech firms, to private education companies and gaming addiction.

During its earnings call on Wednesday, Tencent president Martin Lau told analysts that he expects more regulations will be coming in the near future.

The unrelenting sell-off has spurred some of the world's most well-known investors to rethink their investments in the nation's shares. Funds including Cathie Wood's flagship Ark Innovation ETF, Soros Fund Management, D1 Capital Partners and Soroban Capital Partners have all exited some or all of their holdings of US-listed China shares.

In the span of just six months the Nasdaq Golden Dragon China Index - which tracks 98 firms listed in the US that conduct a majority of their business in China - has plunged about 52 per cent. While the gauge managed to stage a slight rally on Wednesday, gaining 1.4 per cent, its members have still combined to shed nearly US$930 billion in value since the benchmark hit a record high in February.

BLOOMBERG