6 Dec 2021
China Tech Index Plummets to Lowest Since Launch as Rout Intensifies
The Index Today
China tech were seen shares tumbled on Monday, with a closing tagged at its lowest level since launch last year as concerns rise above how much more pain Beijing is willing to inflict on the sector.
The Hang Seng Tech Index closed down 3.3%, its biggest decline in nearly two months, tagged at its lowest level since before its July 2020 inception. Alibaba Group Holding Ltd. and JD.com Inc were the biggest losers, each sinking at least 4.9%. Both companies are also known traders in the U.S.
Castor Pang, head of research at Core Pacific Yamaichis said that the selloffs in the dual-listed stocks in both Hong Kong and the U.S. will continue given the U.S. regulation scrutiny. The decline tracks Friday’s 9.1% plunge in the Nasdaq Golden Dragon China Index, which was the biggest decline since 2008, on worries that Didi Global Inc.’s delisting would put pressure on other Chinese firms to follow suit. “It could be troublesome for them to submit accounting records to the U.S. government,” Pang added.
Bloomberg reported that the U.S. regulators last week deepened efforts to boot Chinese companies off American stock exchanges for not complying with Washington’s disclosure requirements. A delisting from the U.S. stock market could raise the Chinese firms’ cost of capital and reduce investor pool.
China’s central bank on Monday evening cut the amount of cash most lenders must hold in reserve to boost a slow economy, a move that UOB Kay Hian said will do little to lift sentiment in Hong Kong shares as investors are more concerned about regulatory risk, Bloomberg News added.