Washington DC: China’s technology stocks have fallen harder than its US peers, as an index of the largest technology stocks listed in Hong Kong showed a drop of 26 per cent in less than three weeks, reflecting how a sudden turn in the market has resulted into significant losses for investors who piled into popular stocks earlier this year.
The Hang Seng Tech Index — which tracks 30 companies including Chinese internet giants Tencent Holdings Ltd, Alibaba Group Holding Ltd and smartphone maker Xiaomi Corp — closed on Tuesday at its lowest level in 2021 and has slipped into the bear-market territory (drop of at least 20 per cent), reported the Wall Street Journal (WSJ).
In comparison to this, the Nasdaq Composite had closed on Monday 10.5 per cent lower than the index’s high on February 12.
Money managers say that China’s big technology has taken a bigger hit from the investment shift from technology to banking, energy and other less volatile stocks due to an unexpected rise in Treasury bond yields, because a flood of money from investors in mainland China had pushed up their stock prices and valuations sharply.
Nicholas Yeo, who oversees China equities at Aberdeen Standard Investments, Hong Kong, said that Chinese stocks are vulnerable to big swings because they were among the main beneficiaries of excess liquidity in the markets due to the COVID-19 pandemic.
Meituan, a Beijing-based company that runs a popular shopping, food delivery and bookings app, has been one of the big casualties of the recent selloff, which has cut off its value by a third since February 17, reported WSJ. Several individual investors also suffered losses in the swift selloff.
Huang Xiaohu, a 35-year-old technology entrepreneur, had earlier profited from the string trading debut from the strong trading debut of Kuaishou Technology, an operator of a popular short app in China. After the fall of shares, he is now sitting on paper losses of more than USD 10,000.
“I don’t want to talk about stocks anymore. My heart is broken,” said Huang, who also holds the Hong Kong listed shares of Alibaba, with a paper loss of over 20 per cent, reported WSJ.