(Bloomberg) — Shares of China’s online drug sellers slumped in Hong Kong on Wednesday after a media report renewed concerns that Beijing may ban third-party platforms from offering medicines over the internet.
Alibaba Health Information Technology Ltd. plunged 14% and JD Health International Inc. tumbled 15%, wiping out three days of strong gains. Weakness in pharmaceutical shares and concerns of a global recession led the Hang Seng Tech Index to a decline of 4.4%.
The 21st Century Business Herald reported Tuesday, citing one unidentified source, that the regulators will clarify the definition of “third-party platform” mentioned in a May proposal that seeks to amend rules on drug supervision, including a ban of such firms to sell medicinal products.
Meanwhile, Chinese live-streaming platform operators also took a hit in afternoon trading after Beijing published new document to tighten regulation on the sector.
Live-streamers should safeguard the national interest and uphold correct political values, according to a notice released by National Radio and Television Administration. Kuaishou Technology dropped 4.1% while Bilibili Inc. lost 3.4%.
“I think any potential regulatory news can still create some volatility,” said Wenchang Ma, a portfolio manager at Ninety One Hong Kong Ltd. But in the short run, “there is going to be more focus on how the second quarter earnings is going to deliver, and then looking forward to the second half of the year as well,” she said.
Rebound at Risk
Alibaba Health and Ping An Healthcare and Technology Co. are the worst-performing stocks on Hang Seng Tech Index since mid-March when it started rebounding after dropping to its lowest since inception.
The gauge has risen more than 30% since mid-March amid expectations the worst might be over for Chinese technology giants, which have been suffering from regulatory crackdown since late 2020.
Still, the draft policy should have “minimal operational impact on internet healthcare leaders, such as AliHealth”, Citigroup Inc. analysts including John Yung wrote in a note. Their related businesses should conform with the policy and their e-commerce platform businesses don’t directly sell drugs online, they said.
“For those online pharma names, some people are worried about rising regulatory risks today,” said Banny Lam, head of research at CEB International Investment Corp. “I think the impact should be limited since Beijing has vowed to support the platform economy.”
(Updates with more context)
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