Hong Kong stocks wavered in early trading as traders turned to old-economy stocks like banks and property developers to shelter from another bout of sell-off in technology stocks.
The Hang Seng Index fell 0.6 per cent to 26,032.03 as of 10.19am local time on Tuesday after sliding by the most in 14 months on Monday. The Hang Seng Tech Index lost 1.2 per cent on the first anniversary of its introduction.
HSBC rose 2 per cent while Citic added 1.9 per cent. Developers New World Development and Country Garden both climbed by more than 1 per cent.
China’s has launched a new nationwide campaign to purge what it deems problems in the internet industry, which has been battered for months in an almost continuous crackdown from different government bodies. Chinese and tech stocks slumped from Shanghai to Hong Kong and New York, erasing at least US$557 billion in market value.
China’s policy tightening by central bankers and regulatory agencies are worrying investors at a time when expansion in the world’s second-largest economy is losing momentum, even if the regulatory crackdown is seen as an effort to improve the quality of growth.
“We could see times when markets become concerned that China‘s policy setting might be excessively tight,” BlackRock strategists said in a note to clients on July 26. “That points to downside risks in the short term.”
In Tuesday trading, Tencent Holdings declined 4.2 per cent to HK$469, leading losses among tech index peers. The WeChat operator slid by the most in nearly a decade on Monday after China asked the firm to end its exclusive music-licensing deals.
The Shanghai Composite Index declined 0.3 per cent to 3,456.41. Offshore funds dumped 12.8 billion yuan (US$2 billion) of mainland shares on Monday, the most in a year based on Stock Connect data compiled by Bloomberg.
Monday’s selling has knocked back net inflows this month to just under 406 million yuan. That is still a tiny dent to the cumulative buying spree this year of 224 billion yuan, and 300 billion yuan over the past 12 months, according to stock exchange data.