A wave of selling in China’s bellwether technology stocks continued for a fifth day, following Beijing’s latest moves to tighten its grip on the nation’s Internet giants.
The Hang Seng Tech Index dropped as much as 3.7 percent after the Chinese State Administration for Market Regulation issued draft rules banning unfair competition among the nation’s online platform operators.
The benchmark Hang Seng Index slumped more than 2 percent.
Photo: Bloomberg
Losses accelerated in afternoon trade as China issued separate rules to protect key network facilities and information systems, effective next month.
Baidu Inc (百度) and NetEase Inc (網易) fell more than 5 percent, while Alibaba Group Holding Ltd (阿里巴巴) and Tencent Holdings Ltd (騰訊) dropped by at least 4 percent.
That followed Monday’s selloff in Chinese online game firms in the wake of state media criticism of the sector, which spilled over into US trading overnight as the US Securities and Exchange Commission warned about the risks of investing in Chinese stocks.
The wide-ranging proposals released yesterday come after the Chinese Ministry of Industry and Information Technology last month launched a campaign aimed at rooting out a raft of problematic behavior.
It follows moves by Beijing to rein in the country’s Internet leaders in areas from antitrust to data security and ride-hailing.
The draft covers protections for intellectual property and brand reputation, as well as a ban on using algorithms or fake reviews to promote goods and services.
Alongside expressly prohibited behaviors such as forced exclusivity arrangements, companies will also not be permitted to use technical means to interfere with the operations of rival platforms or maliciously render those services incompatible with their own.
The latter could force giants like Tencent and Alibaba to dismantle their walled-off ecosystems that had prevented users from accessing one company’s services from the other’s platforms.
“Investors are concerned that regulatory reform is far from over and that policies will continue to be introduced,” Zhongtai Financial International Ltd (中泰金融國際) analyst Alvin Ngan said. “With risk appetite low, investors are thinking ‘sell it first.’”
On mainland markets, the CSI 300 Index fell 2.1 percent, with declines led by healthcare and consumer sectors.
In the weeks following a ban on profits in China’s tutoring sector, stocks have gyrated on state media warnings on everything from gaming addiction, alcohol and e-cigarettes to over-marketing of infant formula.
Investors in mainland China dumped another HK$4.1 billion (US$532 million) of Hong Kong stocks, the fourth consecutive day of net selling of the territory’s shares, data compiled by Bloomberg showed.
The HSI Volatility Index jumped nearly 14 percent, the most in three weeks.
The Hong Kong dollar traded at its weakest level in 17 months.
China’s uncertain regulatory environment continues to cast a shadow on the tech sector.
US filings showed that other funds joined George Soros’ investment firm in dumping China-based companies with listings in the US in the second quarter.
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