Tencent (0700) fell as much as 6 percent in morning trading on Tuesday amid market rumours circulating on the same day about a potential adjustment to value-added tax policies affecting internet services.
However, mainland media later cited brokerages as saying the rumours were unfounded, noting that claims of VAT hikes for financial and internet services do not stand up in terms of tax category, legal basis or policy logic, and have extremely low credibility.
Other major Chinese tech stocks also fell. Alibaba (9988) once dropped 5 percent, while Kuaishou (1024) at one point slid 7.7 percent on Tuesday morning.
As of 3pm, Tencent, Alibaba and Kuaishou were down 2.92 percent, 1.47 percent and 4.42 percent, respectively.
The market reaction followed a policy move announced on Sunday, under which authorities raised the VAT rate for basic telecommunications services from 6 percent to 9 percent. Shares of the three major mainland telecom operators also fell, as investors assessed the impact of the adjustment.
China Unicom (0762), China Telecom (0728) and China Mobile (0961) plunged 6.3 percent, 5 percent and 2.3 percent, respectively, on Monday. China Unicom and China Telecom continued to fall this morning, down 1.87 percent and 1.76 percent at midday, while China Mobile’s shares were steady, rising 0.7 percent by midday.
Cynthia ZHONG
