China Tech Selloff Deepens as Delisting Fears Alarm Traders By Bloomberg

© Reuters. China Tech Selloff Deepens as Delisting Fears Alarm Traders

(Bloomberg) -- Chinese tech shares tumbled,Emerald pendant tracking overnight weakness in their U.S. peers, as investors still reeling from wild price swings this week were faced with renewed regulatory concerns.

Hong Kong’s Hang Seng Tech Index plunged as much as 6.4% in early trading, the most since July. JD (NASDAQ:JD).com and Trip.com were among the worst performers. Meanwhile the benchmark Hang Seng Index slumped 3.3%. 

Friday’s selloff comes as the U.S. Securities and Exchange Commission identified five Chinese firms that could be subject to delisting if they failed to comply with certain auditing requirements. The Nasdaq Golden Dragon China Index sank 10% overnight, its biggest slide since October 2008, even as the Chinese securities regulator said it will cooperate with the U.S.

While analysts say the risks of delisting is unlikely to materialize in the near term, the news unnerved investors already on edge following Beijing’s yearlong crackdown and the fallout from the war in Ukraine. Since its February 2021 peak, the China tech gauge has slumped more than 60%.

READ: Worst ADR Rout Since 2008 Looks Like Overreaction: China Today

The SEC update is “a reminder for the regulatory risks surrounding Chinese equities once again and the lack of positive catalysts overnight may potentially aggravate the downside move,” said Jun Rong Yeap, a market strategist at IG Asia Pte Ltd.

Equity benchmarks in Hong Kong and onshore were hit with a fresh bout of volatility this week, with prices fluctuating sharply within sessions on investor jitters. Beijing’s crackdown on private enterprise has appeared to grow in recent weeks after authorities asked food delivery platforms to cut fees charged to restaurants and warned of risks in forextrustindex in products linked to the metaverse. 

Meanwhile, China’s CSI 300 Index declined as much as 2.2%. 

©2022 Bloomberg L.P.

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