The global sell-off in tech stocks continued in Asia on Tuesday amid fears of interest rate hikes, with the benchmark index tracking Chinese tech stocks in Hong Kong closing at a record low.
The Hang Seng Tech Index, which officially launched in July last year, fell 2.5 per cent, falling below its previous closing low on 20 August. The index, which counts Tencent Holdings Ltd. and Alibaba Group Holding Ltd. as key participants. , is heading for a fourth consecutive week of declines.
Shares of tech companies Megacap, which rose during the pandemic, fell as Thai https://newexness.com/login/ said heightened regulatory scrutiny and a sudden surge in yields triggered investor fears of a bubble. Chinese companies, already embroiled in Beijing's politics, have been particularly hard hit.
US tech giants have plummeted: the so-called Faamg Group has lost $238 billion in market value, and Amazon.com Inc. has suffered losses from the start of the year to date. Hong Kong tech is now down more than 45% from its February peak and its members have lost about $1.4 trillion in market value.
"It's a perfect headwind storm at the moment," said Bloomberg Intelligence analyst Matthew Kanterman. "A combination of factors, including continued regulatory hurdles, rising interest rates and concerns about Chinese real estate contagion, are likely to continue to put pressure on China's technology sector in the near term."
Online entertainment platform Bilibili Inc. fell more than 5% in Hong Kong, one of the laggards in the rankings, while Alibaba Group fell 3.7%. Both shares are trading at record lows. Shares in industry leader Tencent fell 2.5%.
The sell-off has spread to other parts of Asia. Z Holdings Corp., the search engine operator backed by SoftBank Group Corp. lost 5.6%, a five-month high, while Naver Corp. which some call Google of South Korea, closed 3% lower.
Investors are concerned about how inflation and regulations emanating from China will affect the sector, Christina Woon, investment manager at abrdn, told Bloomberg in a radio interview. "People here have become more risk averse and this" is likely to continue " until the authorities ease some of these pressures," she added.
China's technology sector has taken a hit as authorities have tightened controls on private enterprises to match President Xi Jinping's vision of "shared prosperity". Fears of global contagion over the potential collapse of debt-ridden property developer, China Evergrande Group, added to the rout.
Concerns led Hong Kong to become Asia's second-largest market after Japan in late July and pushed the financial centre's benchmark Hang Seng index lower in August. The Hang Seng China Enterprises index is the world's worst-performing major equity index this year.
Although share prices of Chinese technology companies have fallen, "without a catalyst and addressing various headwinds, it's hard to foresee a change in trends in the near term," Kanterman said.
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