Hong Kong stocks slipped on Monday as investors assessed the impact of Beijing’s clamp down on monopolistic behaviour in the technology sector, while coronavirus infectionsincreased in both mainland China and the city. Major tech stocks took a pounding.
The Hang Seng Index lost 0.3 per cent to close at 26,314.63. The Shanghai Composite Index finished 0.02 per cent higher at 3,397.29. Both gauges had fluctuated between gains and losses earlier in the day.
Investors are closely monitoring signals from Beijing about antitrust rules after the government recently stepped up its regulation of the country’s internet and technology sectors. Earlier this month the Politburo, the Communist Party’s top decision-making body, vowed to intensify its antitrust efforts and prevent “disorderly capital expansion”.
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At the weekend Chinese financial regulators demanded Ant Group, an Alibaba affiliate and the world’s largest fintech company, rein in the influence of technology on its financial services. Ant must return to its origins in online payments and prohibit irregular competition, protect customers’ privacy in operating its personal credit rating business and establish a financial holding company to manage its businesses, the People’s Bank of China’s deputy governor Pan Gongsheng said in a statement on Sunday.
Alibaba Group Holding plunged 8 per cent to HK$210, the lowest level since June 30, even after it announced it would increase its repurchasing of shares to US$10 billion from US$6 billion through to the end of 2022. The company owns the South China Morning Post.
Affiliates also suffered, with film studio Alibaba Pictures dropping 2.1 per cent to HK$0.92, and Alibaba Health plummeting 13.1 per cent to HK$20.55 in Hong Kong.
“The shock to the market from the probe into Alibaba is big, as investors are doubting or unsure whether regulators are targeting only Alibaba or [antitrust in general]. If the latter, the hit will be huge as tech giants in Hong Kong such as Tencent and Meituan could fall into the scope,” said Alan Li, portfolio manager at Atta Capital in Hong Kong.
The Hang Seng Tech Index shed 4.3 per cent as other technology giants also tanked. JD Health, Meituan and Tencent were the biggest losers after Alibaba, down 8 per cent, 6.9 per cent, and 6.7 per cent respectively.
Toymaker Pop Mart plummeted 9.9 per cent to HK$77.65, after Xinhua News Agency said regulators would further standardise the management of “blind box” producers. Blind boxes, packages containing undisclosed toys, have become a craze, prompting the authorities to raise concerns that they can lead to addiction.
Meanwhile, Covid-19 flared up in China, with Beijing entering “emergency response mode” after at least five more cases were confirmed. The Chinese capital tested 234,413 people on Saturday, with all results proving negative, and closed villages and residential areas in the Shunyi and Chaoyang districts where new cases have been found.
On the mainland, liquor stocks and car makers led the gains. Kweichow Moutai, the most valuable liquor stock in the world, added 2.4 per cent to 1,873 yuan. SAIC Motor Corporation surged by the daily cap of 10 per cent after media reports said it and Alibaba had created a new vehicle technology firm with registered capital of 10 billion yuan (US$1.53 billion).
Hong Kong recorded at least 70 new coronavirus cases on Monday. The city is rushing to contain a cluster at a public hospital in Kwun Tong by requiring mandatory testing of people connected with two wards. A “super spreader” patient infected seven more people, pushing the size of the outbreak to 19.
Elsewhere, US President Donald Trump has signed a massive virus-relief package, saving the government from a shutdown this week. Bloomberg reported that the aid plan, including government funding support, is worth US$2.3 trillion.
The market is likely to see small fluctuations in the last trading days of the year, said Li. “The market is likely to hover between 26,000 and 26,800, as I don’t see any major factors that could lead to any breakthrough.”
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