Chinese Tech Stocks Fall as Tencent Shuts Game Streaming Site

  • Hang Seng Tech Index extends losses to a third session
  • Tencent said it will shut down Penguin Esports in June

Chinese tech stocks slid for a third day as Tencent Holdings Ltd.’s decision to shut its game streaming service further hurt sentiment in a sector already bogged down by regulatory risks.

The Hang Seng Tech Index fell as much as 3% in Friday early trading, with video streaming firm Bilibili Inc. among the worst performers. Meituan was also a drag on the gauge, following news that Sequoia Capital reduced stakes.

Tencent’s decision comes more than a year after Beijing blocked a merger between its investees, an entity which the soon-to-be closed platform Penguin Esports was expected to be folded into. China tech stocks have come off a record low in mid-March, but yet to stage a sustainable rally amid regulatory risks.

Shares of live-streaming platforms led a decline in U.S.-listed Chinese stocks on Thursday. The Nasdaq Golden Dragon China Index closed 4.5% lower.

“The falling of tech shares here today are mainly following the overnight ADR moves, and Sequoia Fund’s selling of Meituan shares could also hurt sector sentiment,” said Steven Leung, executive director at Uob Kay Hian Ltd. in Hong Kong.

Tech shares have been hit especially hard recently, following Beijing’s crackdown on the live-streaming sector’s tax evasion and a series of hawkish comments from the Federal Reserve.

Chinese authorities have repeatedly vowed to add policy stimulus and stabilize markets, but that’s done little to soothe investors worried of a spillover from higher U.S. interest rates, among other risks.

On Friday, China’s regulator said it will start a campaign until early December to curb violations in internet companies’ algorithm.

The Hang Seng Index also headed for a third day of declines, shedding as much as 1.1% on Friday. China’s benchmark CSI 300 Index also fell.

Author: Charlotte Yang, Bloomberg

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