As China shatters confidence, Hong Kong’s mixed Asian trade suffers.
Investors kept a wary eye on China following its latest crackdown on a range of industries, and Asian markets were mixed Tuesday, with confidence at a premium after the previous day’s sell-off. Hong Kong suffered another hefty loss as investors kept a wary eye on China following its latest crackdown on a range of industries.
The announcement of new laws on the tutorial industry, which has destroyed private education organizations, as well as more steps against internet firms and new rules for property and food delivery companies, has traders worried about where Beijing will strike next, according to analysts.
This comes amid growing concerns about the Delta Covid variant’s rapid spread and the sluggish introduction of vaccines, prompting some governments to impose new lockdowns or other containment measures.
Meanwhile, the Biden administration’s highest-level China-US negotiations ended with little progress in addressing their disagreements, implying that tensions between the two countries will continue to simmer.
After investors were worried by Beijing’s latest effort to tighten its control on the economy, Hong Kong fell more than 5%, extending Monday’s slump of more than 4%.
It announced over the weekend that it would make it practically impossible for companies that teach school curriculums to make a profit, raise finance, or go public.
Officials also sought to bring in tech giant Tencent, while also announcing new measures to safeguard delivery drivers who are underpaid.
Rodrigo Catril of National Australia Bank remarked, “China’s regulatory uncertainty is not going away.” “Indeed, it appears to be expanding, with no clear indication of when or where it will end.”
Firms caught up in the regulatory sweep in Hong Kong plummeted even further, however the losses for education firms were not as severe as they had been on Monday.
Among the tech companies that have taken a hit is Tencent, which was told by officials to give up its exclusive music label rights due to alleged antitrust violations, fell more than 7%, while Alibaba fell 5%. Meituan, a food delivery service, has lost more than 12% of its value.
Shanghai, Mumbai, Wellington, Bangkok, Jakarta, and Taipei all had declines, while Tokyo, Singapore, Sydney, Seoul, and Manila saw gains.
At the open, London, Paris, and Frankfurt all fell.
“The big question today is if regulators would do more and broaden the crackdown to other sectors,” CMB International Securities strategist Daniel So noted.
“Regulatory concerns will be the main market overhang in the second half.”
The dismal atmosphere in Asia contrasted sharply with Wall Street, where all three major indexes finished at new highs, owing to improved corporate profits and. Brief News from Washington Newsday.