Alibaba, JD.com pace stock losses in Hong Kong amid global tech, crypto slump on policy risks

• Chinese tech stocks extend slide after their Nasdaq peers suffered the biggest weekly beating since the onset of Covid-19 pandemic
• Hong Kong saw the biggest outbreak of Covid-19 infections in 18 months on Sunday, hurting the chances of further economic reopening

Chinese technology stocks tumbled in Hong Kong, tracking a slump in US peers and digital assets as traders turned cautious on policy tightening risks and the city recorded the most Covid-19 cases in 18 months.

The Hang Seng Tech Index lost 2.5 per cent at the local noon trading break, the steepest in two weeks as Alibaba Group Holding and JD.com led losses for a second day. The Hang Seng Index retreated 0.9 per cent, while China’s Shanghai Composite Index rose 0.2 per cent.

Alibaba, the owner of this newspaper, fell 4.8 per cent while Tencent Holdings slipped 1.8 per cent. NetEase lost 7.2 per cent, JD.com retreated 5.1 per cent and Meituan dropped 1.3 per cent.

Major Asian markets fell. Shares in South Korea retreated by 1.6 per cent, while Australian stocks lost 0.4 per cent. The Japanese benchmark was little changed.

“The start of Fed hiking cycles tends to pose a modest headwind to Asian equities,” strategists at Goldman Sachs wrote in a report on Friday. Still, regional response to the onset of Fed tightening may not be as severe as previous episodes, given China’s easing bias, they added.

Today’s decline halted a five-week rally in the broader market that has gained about US$225 billion in value, according to Bloomberg data. The Hang Seng Index has risen 6.7 per cent this year before today, the strongest start to a year since 2019.

The Nasdaq Composite sank 7.6 per cent last week, its worst pullback since the Covid-19-induced slump in March 2020, amid hawkish signals from the Federal Reserve. The sell-off has also spilled into other markets as Bitcoin and other cryptocurrencies took a beating.

Alibaba is expected to issue its quarterly report early next month, putting tech valuation in focus. Its third-quarter earnings likely fell by 25 per cent from a year earlier, according to market consensus. Five tech members have confirmed their reporting dates this quarter, accounting for about 17 per cent of index weight, according to compiler Hang Seng Indexes Co.

Elsewhere, Hong Kong confirmed 140 new coronavirus cases on Sunday in the worst outbreak in 18 months, further denting the outlook for economic reopening. A top health official warned it might take two to three months to contain the fifth wave of infection.

Separately, China Evergrande jumped as much as 13.4 per cent, the most in two months on signs of restructuring progress. The Guangdong provincial government may unveil its restructuring plans by March, Reuters said, citing news outlet REDD.

AnHui Higasket Plastics Co Ltd, which manufactures refrigerator parts, started trading for the first time in Shanghai. Its shares jumped 44 per cent.

Author: Cheryl Heng, SCMP