Shares hammered amid China cleanup

Top News | Winnie Lee 27 Jul 2021

Hong Kong and mainland stocks slumped to their lowest this year, dragged down by new-economy shares after Beijing announced rules targeting technology, property and private education companies.

The Hang Seng Index declined by 1,129.66 points, or 4.13 percent, to 26,192.32 points yesterday. This was the lowest since December last year.

The main board's turnover was HK$268.25 billion, the highest for more than three months.

The Hang Seng Tech Index plunged 6.57 percent, or 477.18 points, to 6,790.96 points.

That came after the mainland cybersecurity regulator announced a six-month campaign to clean up irregularities in the internet industries.

Private education sector also suffered due to the new regulations on tutoring firms in the mainland.

New Oriental Education and Technology dived 47 percent in Hong Kong, Scholar Education tumbled 45 percent, China Beststudy Education slumped 42 percent and Koolearn Technology lost 33 percent.

Meanwhile, Tencent's music arm has been asked to relinquish its exclusive music rights and fined 500,000 yuan (HK$600,000) by the competition watchdog.

Heavy-weight Tencent shares slumped 7.72 percent to HK$490, a one-year low. The market valuation lost HK$393.4 billion in one day.

NetEase plunged 13.29 percent after its music arm announced that the company supports the antitrust regulator's penalty on music platforms.

Seven agencies, including the State Administration for Market Regulation and Cyberspace Administration of China, said online food platforms must respect the rights of delivery workers, such as the local minimum wage.

As the mainland's largest food-delivery platform, Meituan plunged 13.76 percent to HK$235.6. It had the biggest fall in a single day.

Other tech shares also dropped.

Alibaba plummeted 6.38 percent to a one-year low at HK$192.10. Alibaba Health fell 11.54 percent. slid 7.8 percent to HK$267.2. JD Health dived 17.08 percent to a record low and JD Logistics dropped 11.99 percent to its lowest point.

Bilibili was down 11.46 percent.

Economist Stephen Roach warned in a CNBC interview that the mainland crackdown against US-listed China stocks will have widespread implications as American companies and their investors will not be able to fully cut themselves off from China when everything goes through a global supply chain.

Developers and property managers also plunged after eight agencies released a statement to clean up irregularities in the real-estate industry.

Shimao Services fell 19.55 percent. Country Garden Services, Sunac Services and Yuexiu Services fell more than 10 percent.

Hotpot chain operator Haidilao International dived 16.69 percent, the worst performer among blue chips, after the company said the first-half profit will grow slower.

However, utility stocks outperformed. CLP rose 1.72 percent, the best performer among blue chips.

PCCW rose 1.69 percent after announcing it would sell its data center business to DigitalBridge Group, a New York-listed digital infrastructure investment firm, for US$750 million (HK$5.85 billion).

Meanwhile, the Hang Seng Indexes Co launched two indexes tracking the consumption sector.


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