Chinese tech stocks continued to slide in choppy markets amid regulatory pressure, geopolitical tensions and the ongoing COVID-19 wave, where cases continue to climb.

Share Market Live

NSE

Hong Kong’s Hang Seng Index fell by 5.72 percent to 18,415.08, after falling to its six-year low earlier in the day on March 15. On the mainland, the nearby Shenzhen Component Index fell by 4.36 percent to its yearly low of 11,537.24 and the Shanghai Stock Exchange fared no better by sliding 4.95 percent to a yearly low of 3,063.97.

The Hang Seng Tech Index, in particular, fared terribly as it slid by 7.80 percent over the day, as tech stocks like Tencent, Alibaba and Meituan continued to bleed.

What has caused the recent slide?

The most recent slide that Chinese stocks have seen is on the back of fears that China had been helping Russia with its war on Ukraine. US officials recently told multiple news outlets that China had shown some willingness to support Russia militarily in Ukraine. In response, the US has warned China that the country could be facing similar sanctions to Russia through private channels.

Also read: Can CIPS, China's potential SWIFT competitor, help Russia?

This has sparked fear in investors that Chinese companies may be ostracised from global markets much like Russian companies.

COVID-19 fears

China’s increasing COVID-19 daily case load has also caused worries among investors. Shutdowns and movement restrictions across economic centres like Shenzen, Beijin, Hong Kong, Shanghai and other smaller cities have caused investors to divest from riskier assets like equities during China’s worst COVID-19 outbreak since 2020.

“China is experiencing the largest wave of COVID since the end of national lockdown in March 2020,” ANZ Research’s Raymond Yeung and Zhaopeng Xing wrote in a note on March 14.

Also read: China COVID outbreak worries market watchers; say more speed bumps for auto sector ahead

China’s crackdown

China’s tech companies have been facing downward pressure due to the country’s ongoing crackdown on its tech sectors and its highly influential billionaires. Names like Tencent, Alibaba, Didi and more faced the anger of the Chinese regulator. As a result of the crackdown, over $1 trillion in value was wiped off from the Chinese stock markets over the previous year.

A “material rerating for China tech may need to see a shift in regulatory tone,” said Marvin Chen, a strategist at Bloomberg Intelligence.

(Edited by : 8681)