(Bloomberg) — Chinese tech stocks erased earlier gains on Tuesday as worries over rising interest rates and Covid-19 lockdowns outweighed optimism from Beijing’s approval of new video game licenses.
The Hang Seng Tech Index slid as much as 1%, having earlier jumped by 2.5% as shares of video game companies rallied. Kuaishou Technology was the largest drag, falling as much as 11%, with investors citing concerns about its earnings outlook. The benchmark Hang Seng Index also slid.
China ending its months-long freeze on gaming approvals will likely help ease market anxiety that’s plagued the sector following a yearlong crackdown. But investors are also confronted with other headwinds, including a surge in Treasury yields before U.S. inflation data due later, and a dimming growth outlook for China as lockdowns continue.
Read more: China Ends Game Freeze by Approving First Titles Since July
“The market is waiting for the U.S. inflation figure so the broader sentiment is a bit cautious today, despite the good news in the regulatory front in China,” said Linus Yip, a strategist at First Shanghai Securities. “Investors won’t pile in at this moment given so many uncertainties, such as pace of rate hikes, Covid situation in China and that property crackdown is still going on.”
Chinese authorities’ actions to stabilize markets in recent weeks have done little to soothe market jitters, with the broader Hang Seng Index down nearly 10% this year and China’s benchmark CSI 300 down some 17%.
On Monday, the China Securities Regulatory Commission again pledged further support to the “healthy” development of listed companies.
Meanwhile, Alibaba Group Holding Ltd. fell as much as 1.9% as the Daily Journal Corp., a newspaper and software business that counts Charlie Munger as one of the overseers of its stock portfolio, cut its stake in half.
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