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China Tech Stock Rout Reminds Investors Who They’re Dealing With

  • A slew of further regulatory probes and stinging fines have sent China’s biggest tech names plummeting back to earth once again, marking their second consecutive day of declines.
  • Chinese corporate earnings are due in the coming weeks and investors will have more data to chew on, as well as an opportunity to assess the impact of zero-Covid policies on China’s companies.

Just when you thought it was safe again to dip your toe into Chinese tech stocks, a slew of further regulatory probes and stinging fines have sent China’s biggest tech names plummeting back to earth once again, marking their second consecutive day of declines.

The Hang Seng Tech Index, which comprises primarily Chinese tech giants, fell 2.8% yesterday, after dipping to as low as 3.9% at one point, taking declines from its June peak to 12% and reminding investors that they could be catching falling knives, rather than picking pennies off the floor.

Ecommerce giant Alibaba Group Holdings (-5.53%) and owner of the ubiquitous WeChat app Tencent Holdings (-1.29%) were slapped with regulatory fines over the weekend, reviving fears that Beijing’s purge of its tech sector is not quite over.

For the past several months, global investors were tempted back into Chinese tech counters, believing that Beijing’s slew of measures to bolster the rapidly slowing economy, including monetary and fiscal stimulus, were a sign that the purge of China’s tech companies was over as well.

Signs that Beijing was also easing up on its zero-Covid lockdown measures was also fueling optimism that the worst of China’s pandemic-era policies were likely in the rearview mirror.

But that optimism was snubbed out by the tech sector fines and fresh movement restrictions in Shanghai after an outbreak in the financial center, just weeks after the city exited strict lockdowns.

Global investors are now growing increasingly concerned that Beijing’s earlier measures to shore up confidence in its most lucrative sectors was nothing more than window dressing and unsure about the durability of any policy shifts.

Earlier this month, Beijing made a sharp U-turn on its vaccine mandate in response to public backlash, a rare concession by the Chinese Communist Party that controls almost every aspect of the lives of its citizens, but also reflecting how difficult it will be for China to exit this seemingly endless cycle of lockdowns.

Chinese corporate earnings are due in the coming weeks and investors will have more data to chew on, as well as an opportunity to assess the impact of zero-Covid policies on China’s companies.

If the past several weeks were anything to go by, Chinese corporate earnings could yet provide another fresh trigger to spark another selloff.

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SuperCryptoNews is a global leading blockchain and crypto news provider, covering daily news on the latest tech and trading developments in crypto. We bring you expansive crypto news coverage especially in Asia, with a focus on Singapore, Thailand and Southeast Asia.

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