Hong Kong stocks hobbled by tech slump amid regulatory bother as Baidu hits new post-IPO low

Martin Choi
·3-min read

Hong Kong stocks fell as technology stocks slipped on overhanging regulatory risks while Baidu slumped to a new post-IPO low. Market sentiment also took a hit from higher Covid-19 cases across the region.

The Hang Seng Index fell 0.5 per cent to 28,417.98, reversing from an earlier gain of as much as 0.4 per cent. The benchmark added 0.7 per cent on Tuesday. Markets in mainland China remain shut for Labour Day and will resume trading on Thursday.

Technology stocks slipped amid regulatory challenges in China, in tandem with a 1.9 per cent slump in the Nasdaq Composite last night. Alibaba Group Holding, the owner of this newspaper, fell 2.3 per cent to HK$220, while Tencent Holdings declined 1.8 per cent to HK$610.50. The Hang Seng Tech Index lost 2.1 per cent.

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Baidu fell 3.5 per cent to an all-time low of HK$194.30, or 23 per cent below its March IPO offer of HK$252. Traders may be bracing for state penalties after regulators this month named 33 apps operated by companies including Baidu for illegal data collection.

Big Tech including Microsoft, Apple and Amazon tumbled by 1.6 per cent to 3.5 per cent after Treasury Secretary Janet Yellen said rate hikes may be needed to stop the economy from overheating. She later walked back on her comments.

“Markets in Hong Kong are lacking a bit of conviction in the short term,” said Angus Chan, head of Hong Kong strategy at UBS. Mainland investors are on holiday, leading to a lack of supporting liquidity inflows into the city’s stock market, he added.

CNOOC added 1.8 per cent to HK$8.44 while PetroChina climbed 1.7 per cent to HK$2.97, leading oil explorers higher. Wharf REIC jumped 1.8 per cent to HK$45.45.

Crude rallied 0.7 per cent to US$66.20 a barrel, bringing the advance to 13 per cent in the past one month, amid a decline in US stockpiles and reflation bets as the US and Europe planned measures to further reopen their economies.

Hong Kong’s borders have been largely closed since February last year, reducing tourist arrivals to a trickle. The government has been planning travel-bubble programmes with other countries to help revive part of the economy, including one with Singapore starting on May 26.

However, Singapore on Wednesday tightened its Covid-19 prevention measures, including a 21-day quarantine rule for most inbound travellers. A travel bubble with Hong Kong isn’t affected for now, and is subject to moving average data, a government official said. Malaysia will introduce another round of targeted lockdowns from Thursday.

In other Asia-Pacific markets, Australia’s S&P/ASX200 added 0.4 per cent. Markets in Korea and Japan are closed for holidays.

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