Chinese Tech Stocks Slide as SEC’s Didi Probe Hurts Sentiment
(Bloomberg) -- Chinese technology shares slumped as the U.S. regulator's probe into Didi Global Inc.'s 2021 debut in New York dampened investor appetite for the sector.
The Hang Seng Tech Index closed 3.3% lower on Wednesday, dropping for a second day. The losses put to test a recent rebound in the battered sector. The gauge of Chinese tech firms rallied last week on the back of the Politburo's vows to support a healthy development of the industry.
The U.S. Securities and Exchange Commission's probe adds uncertainty to the ride-hailing giant as it prepares to depart New York bourses under pressure from Beijing. The troubles underscore the risk of investing in China's tech sector, which still faces regulatory uncertainties despite Beijing's repeated pledges to put an end to harsh crackdowns.
The SEC's probe is hurting “sentiment” even as the investigation is unlikely to impact other stocks in the sector, said Steven Leung, an executive director at UOB Kay Hian (Hong Kong) Ltd. “Diminishing regulatory risk from China should help further rebound on Chinese tech stocks.”
Also weighing on the tech sector are holding cuts by some investors. JD Health International tanked 13% as an exchange filing showed its chairman sold shares. Meituan slumped 4.6% following news that Sequoia funds reduced stakes in the delivery giant. Both were among the worst performers on the tech gauge.
JD.com fell as restrictions on sale of the stock by Tencent holders who received the shares as a dividend were lifted.
Hong Kong's benchmark Hang Seng Index was also down more than 1%. The mainland markets reopen Thursday after the Labor Day holiday.
©2022 Bloomberg L.P.
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