Tencent, JD.com weigh on Hong Kong market as China finalises cybersecurity measures to tighten oversight of tech companies

·2-min read

Hong Kong stocks wavered as tech companies tumbled after Chinese regulatory authorities finalised cybersecurity review measures to tighten data oversight of its technology companies in offshore markets.

The Hang Seng Tech Index sank 1 per cent, with Tencent Holdings losing 0.8 per cent while Meituan and JD.com retreated by almost 2 per cent. The benchmark Hang Seng Index was little changed. The CSI300, which tracks the biggest stocks in Shenzhen and Shanghai, declined 0.5 per cent, mirroring opening-day setbacks in 2019, 2016, 2014 and 2012.

China will put into effect on February 15 measures specifying circumstances that affect or may affect national security by network platform operators’ data processing activities, according to a statement on Tuesday.

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“Sentiment remains cautious as the draconian policies on internet companies are not quite finished yet” on top of property-market concerns, said Louis Tse Ming-kwong, managing director at Wealthy Securities. “The first quarter is mainly a consolidation phase.”

The cybersecurity review measures, covering operators with personal information of at least 1 million users, followed a regulatory clampdown and China’s decision to haul up Didi Global days after its US$4.4 billion stock offering last June for potential breaches. The ride-hailing firm is now seeking to delist from New York.

Still, the new measures were silent on tech listings in Hong Kong, suggesting the cybersecurity oversight would exempt IPOs in the city, analysts said.

The Hang Seng benchmark earlier gained on a private report that showed factory activity in mainland China grew at the fastest pace in six months in December. Robust sales of vehicles also underpinned a rally in auto stocks. BYD jumped 2.8 per cent after sales in December surged 76 per cent from a year earlier.

The Caixin China PMI Manufacturing Index rose to 50.9 in December from 49.9 for the previous month, the highest level since June. The report added to evidence that the Chinese economy gained sequential strength in the final quarter of 2021, according to Standard Chartered.

Major Asian markets were mixed on Tuesday. The Japanese and Australian benchmarks advanced by at least 1.8 per cent, while Korean stocks remain little changed.

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