China’s technology giants have seen a combined $823bn wiped from their market value since a February peak as the Xi Jinping-led government expands its crackdown, fueling continual sell-offs.
Bloomberg reported that Chinese authorities issued a sweeping warning to the nation’s biggest companies on Tuesday, and vowed to tighten oversight of data security and overseas listings just days after Didi Global Inc.’s contentious decision to go public in the United States.
The actions of the government has put further selling pressure on China’s biggest technology names including Tencent Holdings Ltd., Alibaba Group Holding Ltd., JD.Com Inc., Baidu Inc. and Meituan.
Paul Pong, managing director at Pegasus Fund Managers Ltd, was quoted by Bloomberg as saying, “The selling will continue in the third quarter.”
He said that he sold two-thirds of his technology stock holdings, including in Tencent and Alibaba, in May. “The measures from authorities will keep coming,” Pong added.
The losses have come from ten firms including three US-listed names. Didi’s ADRs fell 20 per cent on Tuesday, erasing about $15bn of its market value.
The Hang Seng Tech Index, whose members include many of China’s biggest tech companies, fell as much as 1.9 per cent before paring losses to 0.6 per cent on Wednesday, marking its sixth consecutive day of declines.
Tencent slid 1.9 per cent, among the biggest decliners on the Hang Seng Index. Alibaba dropped 1.7 per cent, while Meituan fell 1.3 per cent.
China’s sweeping warning on Tuesday followed the opening of a security review by the nation’s internet regulator last week into Didi and a demand for app stores to remove it.
The move stunned investors and industry executives and has hammered the Hong Kong shares of peers such as Tencent, which is one of Didi’s largest backers.