Tech stocks slide in Hong Kong as Beijing tightens listing rules, regulations on data security

·3-min read

Hong Kong stocks declined for a seventh day as a sell-off in Chinese tech stocks continued after Beijing issued new directives to tighten laws and regulations on offshore stock offerings and data security. Xpeng erased gains in its trading debut.

The Hang Seng Index retreated 0.4 per cent to 27,960.62 on Wednesday, capping a seven-day losing streak and the longest since an eight-day slump ending June 10.

The Hang Seng Tech Index of top Chinese industry leaders slipped 0.6 per cent. Tencent Holdings succumbed 2.1 per cent. Alibaba Group Holding lost 1.8 per cent, Meituan declined 1.3 per cent. Bilibili dropped 5.3 per cent.

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The State Council, China’s cabinet, on late Tuesday said it was tightening rules for offshore initial public offerings and regulatory oversight on Chinese firms’ data security and cross-border data flow. It followed reviews on Didi Chuxing and other firms on national security and data issues.

“The market is still impacted by regulatory risks,” said Francis Lun, CEO at Geo Securities. “Investors worry that tech companies will face more and stricter regulations,” he said, adding that the uncertainties could drag the Hang Seng Index to around 27,000 points.

The tech sector is likely to come under further pressure, after the State Administration for Market Regulation announced after the market closed that 22 cases of companies ranging from Alibaba, Tencent to violating antitrust regulation.

It followed the powerful internet watchdog decision to remove ride-hailing firm Didi Chuxing from the nation’s app stores and called for more reviews into Chinese firms listed in the US. Didi plunged almost 20 per cent in overnight US trading below its IPO price. An S&P index of 50 US-listed Chinese firms slumped 3.2 per cent. the most since May 13.

Oil stocks in Hong Kong also slipped as crude prices retreated from a six-year high after an impasse among world’s major producers about production quota. PetroChina slumped 1.8 per cent and CNOOC fell 2.7 per cent.

An Xpeng P5 on display during at the Auto Shanghai show in Shanghai in April 2021. Photo: Reuters
An Xpeng P5 on display during at the Auto Shanghai show in Shanghai in April 2021. Photo: Reuters

Major stock gauges in mainland markets advanced. The Shanghai Composite Index gained 0.7 per cent to 3,553.72, the most in a week. Shenzhen Component Index added 1.9 per cent. Tech-heavy ChiNext surged by 3.6 per cent.

Health care stocks rebounded, recouping steep losses on Tuesday. In mainland, Shenzhen Mindray Bio-Medical Electronics advanced 7.3 per cent. Ovctek China rose 6 per cent. In Hong Kong, WuXi AppTec advanced 6.9 per cent, Genscript Biotech soared 10.6 per cent.

Xpeng, the Chinese challenger to Tesla, ended flat at HK$165 after completing its US$1.8 billion IPO. The stock, which trades under the 9868 code, opened 1.8 per cent higher at HK$168. The shares were earlier indicated at HK$162 in grey-market trading late Tuesday.

Other stock debutants surged. In Hong Kong, Chaoju Eye Care Holdings rose 32.1 per cent to HK$14.00.

On the mainland, Zhejiang Xinzhonggang Thermal Power added 44 per cent. Guangdong Shenling and Environmental Systems jumped 241.7 per cent. Jiangnan Yifan Motor advanced 78.7 per cent while Wetown Electric Group soared 196.7 per cent.

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