(Bloomberg) — Chinese technology stocks struggled to extend a rally into the third day, as bargain hunters retreated amid lingering concerns about how far Beijing may push ahead with its clampdown on private enterprise.
The Hang Seng Tech Index slid 0.1% as of 11:41 a.m. in Hong Kong, after jumping as much as 3.5% earlier. New Oriental Education & Technology Group also pared its surge to 14% after rising as much as 22%.
The weakening momentum is a fresh reminder of just how fragile investor mood remains about industries that had suffered an unprecedented regulatory assault in recent months. Hesitance among investors has reemerged despite earlier enthusiasm induced by strong corporate earnings, Cathie Wood’s return to the sector and favorable technical indicators.
“It was a technical rebound earlier this morning,” said Daniel So, strategist at CMB International Securities Ltd. in Hong Kong “The market is still observing due to regulatory overhang, while investors have already digested companies’ earnings and any new guidance.”
Weighing on the broader market, Alibaba Group Holding Ltd. fell 2% after rising 3.5% earlier, while Tencent Holdings Ltd. shed 0.5% following a gain of 4.2% shortly after the opening bell.
China’s crackdown on its tech behemoths had caused the Hang Seng Tech Index to tumble more than 45% from a peak in February before enjoying a rebound over the last two sessions.
“We believe uncertainty will remain high across the internet and other related sectors and, by extension, toward Chinese equity in general,” Vincent Mortier, deputy group chief investment officer at Amundi SA, commented via an email on Monday. “We know that cyber security and data protection remain a firm focus for regulators in the short term.”
(Updates with comments and context)
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