Chinese technology shares on Friday and yesterday had their worst two-day drop since July last year due to renewed fears Beijing might roll out more restrictions for private enterprise.
Tencent Holdings Ltd (騰訊) shares sank 5.2 percent yesterday, pummeled by speculation about an unspecified, impending crackdown on China’s largest social media and gaming firm that company spokesman Zhang Jun (張軍) later denied.
Traders pointed to everything from warnings from regulators over the weekend about scams in the “metaverse” — a virtual reality-based social media concept — to talk about yet more curbs on the gaming industry.
Zhang said that the online rumors were unfounded, without elaborating.
Chinese authorities also told the nation’s biggest state-owned firms and banks to start a fresh round of checks on their financial exposure and other links to Ant Group Co (螞蟻集團), renewing scrutiny of billionaire Jack Ma’s (馬雲) financial empire, people familiar with the matter said.
Multiple regulators, including the banking watchdog, told institutions under their oversight to closely examine all exposure they had to Ant, its subsidiaries and even its shareholders up to last month, the people said.
They described this as by far the most thorough and wide-ranging look into deals with Ant and said that institutions were told they must report findings back as soon as possible.
It was unclear what triggered the new scrutiny or whether it will lead to any actions or conclusions by regulators, the people said.
The National Audit Office is leading the initiative, two of the people said.
Hong Kong’s Hang Seng Tech Index, which tracks the biggest Chinese tech firms, lost 5.9 percent over two sessions, the most since July.
The decline started on Friday when Meituan (美團) plunged as much as 18 percent after Beijing rolled out a new policy to curb the delivery giant’s service fees.
“There is concern about new regulatory reforms,” said Justin Tang (鄧文雄), head of Asian research at United First Partners. “Prior to Meituan, there was a sense of ‘this is it in relation to reforms.’ Investors are now thinking that there could be more to come.”
The China Banking and Insurance Regulatory Commission on Friday warned against fundraising and investment products related to the metaverse concept, citing their speculative nature.
A metaverse industry body yesterday vowed that the sector should be developed to serve the real economy.
Tencent shares have lost 40 percent since a peak in January last year.
The gaming giant, along with peers such as Alibaba Group Holding Ltd (阿里巴巴) and Meituan, were caught in Beijing’s crosshairs as China cracked down on monopolistic behaviors and tightened its grip on user data.
The year-long clampdown has wiped out more than US$1.5 trillion in market value from the nation’s tech sector.
“The market is very fearful that more crackdown will come and that could leave technology companies very little room to turn around their businesses,” Core Pacific Yamaichi research head Castor Pang (彭偉新) said. “The metaverse fears show that the market is worried that tech firms may not be able to grow a new business rapidly, like how they did in the past in China. That’s really dampening the already fragile sentiment.”
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