Stocks retreat in Hong Kong, China for weekly loss, as rout of ‘overvalued’ tech stocks on Wall Street spills over to Asian markets

Stocks retreat in Hong Kong, China for weekly loss, as rout of ‘overvalued’ tech stocks on Wall Street spills over to Asian markets

equity markets may have been overdone.” data-reactid=”19″>Stock indices in Hong Kong and China dropped on Friday to end with weekly losses, as the overnight tumble among technology stocks on Wall Street spilled over to Asian trading, raising concern that the recent run-up in the global equity markets may have been overdone.

Hong Kong’s benchmark Hang Seng Index dropped 1.3 per cent to 24,695.45 for a weekly loss of 2.9 per cent after three straight months of gains through August. The CSI300 index that tracks performances on both the Shanghai and Shenzhen markets dropped 1 per cent to 4,770.22, ending the week with a 1.5 per cent decline.

Rising geopolitical tensions had weighed on market sentiment throughout the week, as the US posed new restrictions on Chinese officials and mulled cracking down on other Chinese-made apps besides TikTok. India had also moved to ban over a hundred Chinese mobile apps on Wednesday, adding pressure to technology companies in China.” data-reactid=”21″>Rising geopolitical tensions had weighed on market sentiment throughout the week, as the US posed new restrictions on Chinese officials and mulled cracking down on other Chinese-made apps besides TikTok. India had also moved to ban over a hundred Chinese mobile apps on Wednesday, adding pressure to technology companies in China.

rebound in the mainland’s demand for domestic travel helped cushion the falling indices, before the US tech sell-off overnight rippled over to Asian markets.” data-reactid=”22″>Upbeat economic data from China released throughout the week and a rebound in the mainland’s demand for domestic travel helped cushion the falling indices, before the US tech sell-off overnight rippled over to Asian markets.

The benchmarks in Hong Kong and China took their cues from declines across most other Asian markets on Friday, with losses being recorded on every major index from Seoul to Sydney. Investors sought refuge after the New York stock market posted its biggest one-day pullback in nearly three months, with the S&P 500 falling 3.5 per cent while the technology-heavy Nasdaq Composite plunged 5 per cent, led by an 8 per cent plunge in Apple’s shares.

Australia’s S&P/ASX 200 dropped 3.1 per cent, while South Korea’s Kospi declined 1.2 per cent. Japan’s Nikkei 225 fell 1.1 per cent. Asian stocks struggled as “investors questioned the sustainability of lofty valuations” of high-flying tech stocks, said Stephen Innes, chief global markets strategist at AxiCorp. “The losses overnight were driven by the same tech stocks that had underpinned the recent heady rises.”

The sell-off in the US markets was sparked by “an accumulation of worries about the rally in the tech sector, overcrowding and rising valuations,” said Kerry Craig, global market strategist at J.P. Morgan Asset Management.

“Governments’ willingness to continue to support household incomes and businesses until a vaccine is readily available or until the virus is brought under control by other means will be key to the outlook from here,” he added.

Technology stocks in Hong Kong dropped in tandem, weighing on the Hang Seng Tech Index of top 30 stocks, which fell as much as 5.4 per cent before paring losses to 1.5 per cent.

AAC Technology, a major supplier of components to Apple, fell 2.1 per cent to HK$47.95. Benchmark heavyweight Tencent also dropped 3 per cent.

E-commerce giant Alibaba declined 3.6 per cent, while mobile phone maker Xiaomi rebounded 2.5 per cent after falling 7 per cent on Thursday.

benchmark Hang Seng Index on Monday, along with China’s largest drugs development and manufacturing services provider Wuxi Biologics, which fell 2.2 per cent.” data-reactid=”34″>Alibaba and Xiaomi will be included in the benchmark Hang Seng Index on Monday, along with China’s largest drugs development and manufacturing services provider Wuxi Biologics, which fell 2.2 per cent.

The three firms replace snack maker Want Want China, developer Sino Land, and China Shenhua Energy on the gauge, signalling a shift from traditional industries to new economy and biotech firms.

Sino Land slipped 0.9 per cent. Want Want China gained 2.6 per cent while China Shenhua Energy rose 1.4 per cent. The two stocks were among 12 blue chips that posted gains.

Infographics: China’s ambitions in semiconductor chips in ‘Made in China 2025’ master plan” data-reactid=”37″>Infographics: China’s ambitions in semiconductor chips in ‘Made in China 2025’ master plan

Producers of semiconductor chips gained, defying the overall slump in the Chinese stock market, on optimism that the government is poised to unveil policies to spur the country’s home-grown industry to counter Trump administration restrictions.

Beijing is preparing broad support for so-called third-generation semiconductors for the five years through 2025, Bloomberg reported yesterday, citing people familiar with the matter. A suite of measures to bolster research, education and financing for the industry has been added to a draft of the country’s 14th five-year plan, which will be presented to the country’s top leaders in October, the people said.

Shares of Semiconductor Manufacturing International Corporation (SMIC), the country’s biggest chip producer, rose1.8 per cent to 66.28 yuan in Shanghai. The stock has more than doubled since its secondary listing in July, following its withdrawal from the New York exchange amid rising US-China tensions. Shares of Tianjin Zhonghuan Semiconductor, which makes discrete semiconductor products, rose 2 per cent to 21.72 yuan.

The same optimism, however, was not shared on the Hong Kong exchange. The Hong Kong-traded shares of SMIC fell 3.9 per cent to HK$23.65 along with the broader market. Shares of Hua Hong Semiconductor, a Shanghai-based chip maker, fell 3.6 per cent to HK$29.15 in Hong Kong.

On the Hong Kong bourse, Galaxy Entertainment led the fall with a 4.8 per cent drop. AIA, which is second to Tencent in weighting on the benchmark Hang Seng Index, fell 3 per cent.

On the CSI300, light-emitting diode (LED) chip maker Sanan Optoelectronics led losses with an 8 per cent plunge.

On the mainland, one stock that traded for the first time soared in its debut on the Shanghai exchange. Jiangsu GoodWe Power Supply Technology, which produces power supply equipment, rose 255.9 per cent to 135 yuan from its initial public offering (IPO) price of 37.93 yuan.

South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.” data-reactid=”49″>This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.

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