(Bloomberg) — Chinese tech stocks fell as Hong Kong markets reopened after a holiday to face renewed growth worries and persistent regulatory risks, sparking another bout of selling.
The Hang Seng Tech Index plunged as much as 7% early Tuesday before paring losses by about half, on track for a fifth straight session of declines. JD.com Inc. and Alibaba Group Holding Ltd. were among the biggest drags. Key equities gauges across the region all slumped, with an index of Chinese firms in the city sliding more than 4%.
The broad decline tracks a global selloff that intensified after the Federal Reserve hiked rates by 50 basis points last week. Beijing is showing no signs of letup in its stringent Covid Zero policy that’s already hurt businesses, and there are growing indications the damage is rippling through the global economy.
In China, “economic figures to be released in coming weeks can be quite ugly given the Covid lockdowns,” said Banny Lam, head of research at CEB International Investment Corp. “The situation may calm down in Shanghai in May or June, but still, the Covid controls are worrying investors. The road will remain bumpy.”
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Meantime, Chinese regulators further tightened their oversight on the internet industry over the weekend, banning younger users from sending virtual gifts on livestream platforms. The latest action came despite a string of recent promises by the authorities to take a softer stance on the sector.
Assurances
Authorities tried to reassure investors again on Tuesday. The onshore market has “solid” foundations for stability, according to a CCTV report citing China’s securities regulator. The short-term market fluctuations won’t change the long-term good momentum of the nation’s capital market, the report added.
The message came amid mounting concerns over growth prospects. Chinese Premier Li Keqiang warned of a “complicated and grave” employment situation on Monday as Beijing and Shanghai tightened curbs on residents in a bid to contain recent outbreaks. Chinese exports also weakened to the slowest pace since the early days of the pandemic, capturing the impact of Covid restrictions.
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Large investors have also started turning away. BlackRock Inc. said it’s jettisoning its bullish stance on China given the lockdowns. Chinese authorities have made repeated promises in the past couple months to support the economy and stabilize markets, but that’s so far failed to give a sustainable boost to stock prices.
The Hang Seng Index fell 2.3% as of 1:24 p.m. local time, having fallen as much as 4.1% to below the key 20,000 level. The Hang Seng Tech gauge was down 3.7%. Hong Kong’s market was closed on Monday. The CSI 300 Index, a benchmark for mainland stocks, traded 0.8% higher after earlier losing as much as 1.8%.
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