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Multiple indices on the Hong Kong Stock Exchange (HKEX) have crashed deep into the bear zone as China continues its purge on tech companies – most of which are listed on the HKEX.
Two indices in particular – Hang Seng Tech Index and Hang Seng China Enterprises Index – have seen complete bloodbath in Hong Kong after persistent actions by various Chinese regulators against multiple tech companies.
After two consecutive days of bloodbath on Monday and Tuesday, the Hang Seng Tech Index is down today, having slipped 43% below their 52-week high seen in February 2021. In the past one month as well, the index is down by 24%.
The index witnessed a carnage on Tuesday, as it crashed 7.97%. Hong Kong-listed shares of Chinese tech giant Tencent fell 8.98% while Alibaba dropped 6.35% and Meituan declined 17.66%.
Although far better, the Hang Seng China Enterprises Index is also in the bear zone – mostly dragged down by its tech constituents. At 8,879.58 points, the index now stands 27% below the 52-week high it had touched earlier in February.
A bear market is when a market experiences prolonged and steep price decline – when securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment.
The Hong Kong equity markets have been worst hit by the Chinese purge on the country’s high-profile tech companies.
China's antitrust regulator, on Monday, had announced a set of guidelines for food delivery platforms, which included paying delivery personnel at least the local minimum wage – a step that could dig into the bottom line of firms such as Meituan and Alibaba's Ele.me.
The directive follows the fine on China’s most valuable company -- Tencent Holding Ltd – over allegations of following anti-competitive practices.
Earlier this month, regulators in the world’s most populous country had also launched a cybersecurity probe on domestic ride-hailing service Didi just days after its successful IPO in the US. The app was, meanwhile removed from the app stores, in accordance with the order.
Earlier last year, the Chinese government had also imposed a US$2.8 billion antitrust fine on ecommerce giant Alibaba, a move after which the company’s shares headed southwards and lost its ‘most valuable Chinese firm’ tag to Tencent. The country had also suspended Ant Group’s US$34.5 billion IPO last year, in what was seen as an abrupt move – days before the IPO was supposed to go live.
