Respite for Hang Seng Tech Index?

HANG Seng Tech Index was launched on July 27, 2020, and tracks the 30 largest technology companies listed in Hong Kong. Using back-testing results, it increased 36 per cent in 2019 and 60 per cent in the first 10 months of 2020 (HKEX). However, due to recent market events, the index have fallen 25.36 per cent year-to-date on Aug 26, 2021.

After reaching a peak for the index on Feb 17, 2021, at 10,945.22, the most recent downtrend can be attributed to China's regulatory crackdown across various sectors and industries. Technology companies are directly impacted by the regulations against monopolistic behaviour as well as the use of data for advertising. Indirectly, the impact is also seen with the Internet giants' other subsidiary also affected in sectors such as food delivery platforms, online drug sales, and more.

After recent weeks of sell-off in Hang Seng Tech Index, it surged 6.9 per cent on Aug 24, which was the best performance for the month. The rebound, after a 5.8 per cent drop in the previous week, was attributed mainly to traders and investors who bought into perceived bargains for stocks with good quality after the recent drop in prices. Technology firms which are also engaging in share buyback that bolsters investor sentiments also supported the index recovery.