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The intensifying regulatory crackdown in China crushed tech stocks for a second day on Tuesday.
The Hang Seng HSI,
fell 4.2% after falling 4.1% on Monday, in what was the index’s biggest drop since the coronavirus pandemic hit global markets in March 2020. The sale to Hong Kong accelerated towards the end of the exchanges.
China’s multi-front attack on its high-profile companies has spread to Meituan 3690,
which fell 18% after the publication of new rules requiring online catering platforms to ensure their drivers receive at least minimum wage.
Chinese tech giants continued to falter, with Tencent Holdings 700,
lose 9% and Alibaba Group 9988,
BABA,
lose 6%. Alibaba 241 Health Information Technology,
fell 19%. The Hang Seng ETF 3032 technology index,
has fallen 16% in the past three sessions.
“As the world’s second largest economy has begun its massive regulatory changes on the tech sector, it has recently extended its reforms to other stocks like real estate and education, which is leading investors to shy away from it all. ask: who will be targeted next? This crackdown on Chinese private companies is significantly shaking market sentiment despite a better than expected earnings season so far, ”said Pierre Veyret, technical analyst at ActivTrades.
BCA Research analysts say the crackdown is part of China’s five-year plan to become a great socialist nation, easing the financial burden on the middle class. “The long-term nature of these goals means that regulatory risks remain high and increases the chances that the crackdown will continue,” they said.
The Hang Seng’s late plunge put pressure on US ES00 stock futures,
which turned negative. Futures on the Nikkei 225 NIY00,
also fell after a positive close for the Japanese NIK market,
“A sense of caution is likely to persist in the markets as investors take a cautious stance due to Asian volatility and the Federal Reserve policy meeting on Wednesday,” said Lukman Otunuga, senior research analyst at FXTM.
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