LONDON – International investors were feeling bruised and uncertain as a third day of heavy selling hammered China’s top tech stocks and began to seep into currency and debt markets.
China’s rise in global indexes in recent decades means money managers are more exposed than ever as Beijing seeks to reduce the dominance of some of its tech, property, ride-hailing and even private education firms.
Tuesday’s falls included a 9 percent plunge in internet giant Tencent, its worst in a decade, as its WeChat social network suspended user registrations while it underwent an upgrade “to align with all relevant laws and regulations”.
China’s blue-chip index dropped to its lowest in nearly eight months, the yuan hit its lowest since April and Hong Kong slumped 5 percent.
In US trading, the Nasdaq Golden Dragon China benchmark of Chinese tech stocks listed in New York fell another 6 percent, taking its losses since Friday past 20 percent and wiping $500 billion off its value.
“The spectre of state intervention into controlling the private sector has created a crescendo of panic selling,” said Sean Darby at Jefferies, calling it an iron fist in a velvet glove.
William Russell, head of product specialists equity at Allianz Global Investors, said the moves had left investors blindsided.
“A key question is what are policymakers in China trying to achieve?” Russell said. One thing was clear, he said: Beijing wanted to prevent companies becoming too dominant.
China is readying a Personal Information Protection Law which calls for tech platforms to impose stricter measures to ensure secure storage of user data.
Beijing-based tech consultant Zhou Zhanggui said investors were over-reacting to the “rectification” of Chinese tech companies.
The Institute of International Finance (IIF) estimated that China’s equity markets suffered outflows of $600 million on Tuesday after bleeding $2 billion on Monday.
Monday’s sell-off was triggered by a clampdown on the $100 billion private education industry which sent shares of tutoring providers such as New Oriental Education & Tech Group and Scholar Education Group down more than 45 percent. – Reuters