China tech stocks slumped on Monday after market regulators hit technology giants Alibaba and Tencent with fines for failing to comply with transaction disclosure rules that breached anti-monopoly laws.
The Hang Seng Tech Index plunged 3.9%, dragged down by Alibaba’s 6.4% drop after the State Administration for Market Regulation (SAMR) released a list of 28 unreported deals that violated rules. Tencent, which was involved in 12 of the transactions on the SAMR list, was down about 2.9% while Hong Kong’s Hang Sang index lost 3.1%.
Five of the 28 unreported deals involved units of Alibaba, including a 2021 purchase of equity in one of its subsidiaries, the Youku Tudou streaming platform. Numerous other companies were also named as having violated the rules in the same announcement.
China’s tech sector has been one of the main targets of a crackdown on monopolistic practices that started in late 2020, but top financial officials have suggested recently that the crackdown is being eased.
Under the anti-monopoly law, the maximum potential fine in each case is 500,000 renminbi (US$74,688).
ALSO IN AF: Beijing Fines Alibaba, Tencent for Disclosure Violations
Rising Covid Cases Also Hit Sentiment
China stocks fell the most in seven weeks on Monday while Hong Kong shares saw their biggest decline in one month.
A rise in domestic cases of Covid-19 was a key factor affecting market sentiment. The CSI300 index sank by 1.7%, while the Shanghai Composite Index lost 1.21% to 3,313.58. The Hong Kong China Enterprises Index lost 3.3% to 7,301.48.
Many Chinese cities are adopting fresh curbs, from business halts to lockdowns, to rein in new infections, with Shanghai bracing for another mass testing campaign after detecting the BA.5 Omicron subvariant.
Energy stocks lost 3.7%, with non-ferrous metal tumbling 4.3%, while tourism and semiconductors each dropped more than 2.5%.
New energy stocks plunged 3.5%, with Tianqi Lithium Corp and Chengxin Lithium Group both down 10%.
- Jim Pollard with Reuters
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