As China’s technology giants struggle, few markets are suffering like Hong Kong. A rush of new listings could eventually soften the blow.
The financial hub has courted Chinese online behemoths such as Alibaba Group Holding Ltd. in recent years, relaxing listing rules and overhauling its flagship stock index. Until recently, share sales were booming, local benchmarks were buoyant and tech euphoria had fueled a surge in trading.
A widening series of crackdowns from Beijing has helped spoil the mood. As of Thursday, the city’s Hang Seng Index was down 3.8% this year, versus a nearly 18% rise for the S&P 500. Big tech stocks have tumbled, and the uncertainty and volatility is likely to dampen issuance of new shares.
Longer term, however, many investors and bankersfigure China’s growing wariness about its companies listing abroad will be good for Hong Kong, which should benefit at the expense of U.S. exchanges.
For now, investors are worried about the uncertain direction of Chinese policy and how it could affect corporate growth, said Brian Bandsma, a New York-based portfolio manager at Vontobel Asset Management.