(Bloomberg) — China’s tech stocks fell once again Wednesday following a weak session for their U.S. peers and as firms backed by Tencent Holdings Ltd. came under pressure after the firm pared investment in the sector for a second time in two weeks.
The Hang Seng Tech Index fell as much as 4% — the most in about four months — in a third day of declines. The gauge is set for its lowest close since its inception in July 2020 with Tencent investees Bilibili Inc., Meituan and JD.com Inc. among the biggest losers.
The Chinese tech giant cut its stake in Singapore’s Sea Ltd. on Tuesday — selling $3 billion of shares — sparking concerns of similar actions at other firms amid Beijing’s regulatory crackdown. China’s U.S.-listed tech shares fell overnight amid a broad selloff in the sector, with traders spooked by the rise in Treasury yields putting pressure on stocks with extended valuations.
Drubbing in Tech Marks Biggest New-Year Stock Rotation Since ’95
Tencent’s move is aiding expectations that the firm and its rivals may pare holdings to address Beijing’s goal of curbing monopolies in the sector. Last month it said it plans to distribute more than $16 billion of JD.com’s shares as a one-time dividend.
Tencent controlled a portfolio of investments worth $185 billion at the end of September, Bloomberg Intelligence estimates.
Live-streaming platform operator Bilibili dropped as much as 9.4% while food delivery giant Meituan dropped as much as 8.6%. China’s No. 2 online retailer JD.com fell as much as 7.2% and Tencent declined as much as 4.2%.
“China’s anti-monopoly rules and regulators’ concerns about data privacy as well as Web security may lead to more divestment in the country’s internet space in the coming months,” Bloomberg analyst Cecilia Chan wrote in a note.
On a more positive note, Alibaba Group Holding Ltd. outperformed after Daily Journal Corp., a newspaper and software business that counts Charlie Munger as chairman, nearly doubled its holding of the Chinese internet giant in recent months.
(Updates to add more stock moves.)
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