(Bloomberg) — China’s tech stocks fell after a volatile open on Tuesday, as traders weighed policy vows to rescue a slumping economy against the risk of fresh regulatory pressures on the sector.
The Hang Seng Tech Index slid 1.4% in Hong Kong, after fluctuating between losses of as much as 4.6% and a flat reading. The initial market slump was triggered by traders selling off Alibaba Group Holding Ltd. following a report that an individual surnamed Ma had been issued new curbs.
Shares of the tech giant shortly pared the majority of its losses to close 1.8% lower, as reports later showed the accused person’s name covered three characters, as opposed to Alibaba co-founder Jack Ma’s two-character Chinese name. Global Times said the person in question works as the director of hardware research and development at an IT company, further quelling speculation over Alibaba.
The episode highlights just how anxious investors remain in the once-mighty tech sector after Beijing’s yearlong clampdown on nearly every corner of the internet sphere. The knee-jerk selling earlier in the day came despite Beijing’s repeated promises to take a softer stance on tech firms.
READ: Alibaba Recovers After Report on ‘Ma’ Briefly Erased $26 Billion
People were concerned about the possibility that Jack Ma is the person in the news, said Steven Leung, executive director at UOB Kay Hian. “The whole technology sector is falling partly due to this sensitive news.”
JD.com Inc. and Xiaomi Corp. were the biggest drags on the Hang Seng Tech Index as traders returned after the holiday on Monday. Meanwhile, the Hang Seng Index eked out a 0.1% gain after early losses, managing to advance for the fifth straight session.
Tuesday’s fluctuation in stocks stands in contrast to the stunning gains recorded last week, including a 10% surge in Hong Kong’s tech gauge, as traders cheered the Politburo’s vows of support for the economy and platform firms.
However, that optimism is being tested as the latest developments darken the outlook again, including a contraction in Chinese activity and an increase in Covid-19 restrictions in Beijing.
READ: Bets of Easing Crackdown Spur Dizzying Jump in China Tech Stocks
Beijing is deploying an increasingly hardcore playbook to contain its nascent Covid-19 outbreak, from repeat testing of most residents to barring access to public places without a negative result. Financial markets in the mainland will remain closed through Wednesday for the Labor day holiday.
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