(Reuters) – China’s tech stocks slumped to new lows yesterday and Hong Kong’s benchmark index hit an almost 10-month trough, as an unrelenting series of Chinese regulatory crackdowns crushed investors’ confidence.
More than $560 billion in market value has been wiped off Hong Kong and mainland China exchanges in a week as funds capitulate out of once-favoured stocks, unsure which sectors regulators will target next.
The Hang Seng fell 1.8% and its weekly drop of 5.8% was the largest since the height of the pandemic panic in financial markets in March 2020.
Stocks in Shanghai also fell, while investors sold risky corporate debt and the Chinese currency. The yuan was poised for its biggest weekly loss in two months as investors rushed to safety amid global coronavirus concerns.
“There isn’t really one trigger, but many bits and pieces that add to the narrative to stay away from China,” said Dave Wang, a portfolio manager at Nuvest Capital in Singapore.
“Almost on a daily basis you have negative news coming out, so it forms the impression there’s no end in sight.” This week alone China announced tougher rules on competition in the tech sector, summoned executives at property developer Evergrande to warn them to reduce the firm’s massive debt and state media reported looming regulations for liquor makers, a favourite tipple for foreign fund managers.
On the heels of crackdowns spanning from steelmaking to e-commerce and education, the moves are sapping faith in a market that seems yet to find a floor after months of selling.
The Shanghai Composite dropped 1.1% to its lowest close in more than two weeks on Friday and blue chips fell 1.9%, with liquor makers leading losses.
China Telecom was a rare bright spot and surged on its debut in Shanghai
