Alibaba Group Holding Ltd. Shares slumped as much as 5.4% to a record low in Hong Kong on Thursday, extending a selloff in Chinese technology giants after Beijing hit the industry with a fresh round of regulations.
Shares dropped after China said it is studying separate proposals to further ensure the rights of drivers who work for online companies and to step up oversight of the live streaming industry.
Sentiment for China’s largest advertising platform also soured after peer Tencent Holdings Ltd. Executives said in a post-earnings conference call that the government can make fairly substantial changes to how companies use data for advertising.
Beijing’s recent crackdowns on the tech sector wiped off about $1 trillion of market value from Chinese shares listed globally last month as they quickly expanded from antitrust and e-commerce concerns to private tutoring, data security and online content.
Alibaba’s shares have slumped 30% this year in Hong Kong compared to a fall of just under 7% for the Hang Seng Index. Its U.S.-listed shares, which have been trading since 2014, are down about 26% for the year and still far away from their record lows.
The selloff has prompted some global fund managers including Cathie Wood to dump their holdings in Chinese stocks over the past few months. In fact, some investors are questioning allocations toward Chinese assets altogether.
The new moves are incremental but investors are not at a point where they “will cease to price in any more additional policies,” said Shine Gao, fund manager at Taicheng Capital Management Co. “Even if the worst is over for big tech firms in terms of new regulations, we should expect that their growth won’t be what it was.”
The Hang Seng Index fell as much as 2.3% Thursday while the Hang Seng Tech Index, which counts many Chinese tech giants as its members, dropped to the lowest since its July 2020 inception.
Tencent reversed earlier gains of as much as 3.4% to trade down nearly 3% in Hong Kong as its warnings for more regulatory curbs on the industry overshadowed second quarter earnings that beat estimates.
Among other tech names, food-delivery giant Meituan tanked as much as 7.2%, following a similar drop in ride-hailing company DiDi Global Inc. In the U.S. Video streaming giant Kuaishou Technology slid as much as 4.7%.
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