fbpx

Type to search

China Tech Stocks Plummet After Alibaba, Tencent Fines

The Hang Seng Tech Index plunged 3.9%, dragged down by the falls of tech giants Alibaba and Tencent. Rising Covid cases also hurt market sentiment.


The US SEC has added Alibaba to a list of companies that face delisting for not complying with audit rules.
The US SEC has added Alibaba to a list of companies that face delisting for not complying with audit rules. Photo: Reuters.

 

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

 

 

 

 

ALSO SEE:

 

 

Alibaba’s India Arm Under Probe for Fabricating Documents – ET

 

China Tries to Soothe Tech Firms in Sign of Easing Crackdown

 

China Tech Stocks Plunge on New Regulatory Crackdown Fears

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

logo

AF China Bond