Shares and other Chinese tech stocks fell on Monday as a result of new fines from market regulators over disclosure rules.
China’s state administration for market regulation on Sunday announced a wave of sanctions for improper reporting of previous agreements, in violation of competition law.
(ticker: BABA) and
(0700.HK) was among the companies fined as a result.
Shares in e-commerce power plant Alibaba fell 8.6% in US pre-market with internet giant
stock trading 3% lower in Hong Kong. Sales could be felt across the sector, pulling down other Chinese technology stocks, including
(NTES), which fell 5.3% and 4.7% in early trading, respectively, while
(BIDU) has fallen 5.8%. Hong Kong’s technology tongue
The Hang Seng index ended 2.8% lower.
Renewed regulatory pressure in China is pouring cold water on what has otherwise been a huge overperformance among Chinese technology stocks in 2022 following a brutal 2021.
Alibaba lost almost half of its value last year, leading to losses in a sector affected by regulatory pressure on both sides of the Pacific. At the heart of the route was a repression from Beijing of the country’s booming technology sector and threats from Washington to delist some U.S. listed Chinese technology stocks. The Hang Seng Tech index fell 32% last year, while
increased 27 per cent.
But 2021 has brought a turnaround. While most, if not all, technology investors are having a painful year – with stocks in a bear market amid high inflation, rising interest rates and fears of recession – Chinese technology stocks have been much more resilient.
One of the best results among its peers, Alibaba has achieved a gain of around 0.5% year to date. By comparison, American tech giants like it
(GOOGL) has fallen close to 20%.
Analysts have been positive that China’s tech stock outperformance may continue – but much of that optimism is based on the idea that regulatory pressure is a thing of the past. The latest news is a sharp reminder that they are not yet solid in the rear view.
Write to Jack Denton at email@example.com