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Hong Kong Hammered By Tumbling Tech After Latest Beijing Crackdown

China’s summoning of its gaming companies saw industry giants NetEase, Tencent, Alibaba and JD.com take a hit on trading floors while Covid fears continued to cast a shadow too

The Hang Seng Index tumbled 2.3 %, or 604.93 points, to 25,716.00 on Thursday. Photo: Reuters


China’s latest move to tighten its grip on its gaming sector drove a sharp sell-off of tech shares in Hong Kong dragging the Hang Seng down by more than 2%.

Chinese authorities summoned gaming companies to demand they not focus on profits and “resist unfair competition to prevent excessive market concentration or even monopolies in the industry.”

The state-run Xinhua agency reported that officials also called for the companies – which included Tencent and NetEase – to remove “obscene and violent content” and avoid “unhealthy tendencies, such as money-worship and effeminacy.”


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The move comes after authorities last week unveiled rules limiting the amount of time children could spend playing video games.

But the latest announcement hammered industry giants, with NetEase collapsing 11% and Tencent losing 8.5%, while Alibaba and JD.com also suffered painful losses.

Investors had been cautiously edging back into the industry in recent sessions on hopes that the crackdown by China on a range of private enterprises may be easing off.

“This demonstrates the risk for those attempting to call the bottom with so much uncertainty still hanging,” Bloomberg Intelligence analyst Matthew Kanterman said.

“I don’t think the overnight news is a big departure from that which we already knew, but the reaction clearly signifies the skittishness of investors around any regulatory news.”



The Hang Seng Index tumbled 2.3 %, or 604.93 points, to 25,716.00. But the Shanghai Composite Index rose 0.49%, or 17.94 points, to 3,693.13, while the Shenzhen Composite Index on China’s second exchange edged up 0.07%, or 1.68 points, to 2,494.28.

Elsewhere across the region, Asian equities retreated on Thursday reacting to growing concerns about the impact of the Delta coronavirus variant.

And Wall Street’s three main indexes finished well in the red after the Federal Reserve’s closely watched Beige Book on the state of the US economy pointed to a slowdown caused by Covid-19, as well as problems with supply and a lack of workers.

It said growth had “downshifted” in July and August, which was “largely attributable to a pullback in dining out, travel, and tourism in most districts, reflecting safety concerns due to the rise of the Delta variant.”



Analysts pointed out that while Covid remained a major headwind, the issue of supplies and cost pressures was noticeably prominent in the report.

“Momentum definitely seems to be slowing as far as the recovery is concerned,” Fiona Cincotta, at City Index, said.

“Before we’d been hearing that the Fed would tighten monetary policy and that’s what was unnerving the market. Now, it’s actually slightly softer data and also rising Covid cases.”

Tokyo ended down with profit-taking playing a part after the Nikkei rose around 5% over the previous four days, while Sydney, Seoul, Wellington, Mumbai, Bangkok and Manila also fell. Shanghai, Singapore, Jakarta and Taipei edged up.



There was little major reaction to news that China’s producer price index, a gauge of the cost of goods at the factory gate, rose to a 13-year high, while consumer prices came in below forecasts.

The Nikkei 225 index fell 0.57%, or 173.02 points, to 30,008.19, while the broader Topix index slipped 0.71%, or 14.68 points, to 2,064.93.

Traders are also keeping tabs on Washington after Treasury Secretary Janet Yellen warned the US government would run out of money next month unless lawmakers hike the federal borrowing limit, which could lead to the world’s top economy defaulting on its debt repayments.

In a letter to House Speaker Nancy Pelosi, she said that without lifting the limit “the United States of America would be unable to meet its obligations for the first time in our history.”



Tokyo – Nikkei 225: DOWN 0.6% at 30,008.19 (close)

Hong Kong – Hang Seng Index: DOWN 2.3% at 25,716.00 (close)

Shanghai – Composite: UP 0.5% at 3,693.13 (close)

New York – Dow: DOWN 0.2% at 35,031.07 (close)


  • AFP and Sean O’Meara


Read more:

China Says Crackdowns Essential to Protect Markets, Tame ‘Barbaric’ Tech Growth

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Sean OMeara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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