Chinese technology stocks including Tencent Holdings Ltd. and Alibaba Group Holding Ltd. tumbled Monday, as investor concerns built about Beijing’s expanding series of regulatory actions against the sector and other disruptive businesses.
The selloff led Hong Kong’s flagship tech index, which marks its first anniversary on Tuesday, to suffer its worst percentage drop since launching, and to finish only marginally ahead of where it made its debut.
Over the weekend, China’s antitrust regulator fined Tencent and ordered it to give up some exclusive music-licensing rights, while state media confirmed that a severe curtailing of the country’s after-school tutoring industry was in the works. And on Monday afternoon, shortly before the Hong Kong market closed, regulators issued joint guidelines for companies such as Meituan on how to treat food-delivery drivers.
Tencent fell 7.7% on Monday, while Meituan dropped nearly 14%, and Alibaba’s Hong Kong stock lost more than 6%.
“The whole market is jittery about where China’s regulations and crackdowns are headed. Instead of waiting to find out, a lot of investors are just selling out of their position,” said Justin Tang, the head of Asian research at United First Partners. He said Beijing’s move on tutoring was a new blow to investor confidence.