China tech stocks fall as growth woes, global rout grip traders

Bloomberg

Chinese tech stocks fall as Hong Kong markets reopened after a holiday to face renewed growth worries and persistent regulatory risks, sparking another bout of selling.
The Hang Seng Tech Index tumbled 3.2% on Tuesday, extending its slide into a fifth day. JD.com Inc. and Alibaba Group Holding Ltd. were among the biggest drags. Key equities gauges across the region all slumped, with an index of Chinese firms in the city sliding more than 2%.
The broad decline tracks a global selloff that intensified after the Federal Reserve hiked rates by 50 basis points last week. Beijing is showing no signs of letup in its stringent Covid Zero policy that’s already hurt businesses, and there are growing indications the damage is rippling through the global economy.
In China, “economic figures to be released in coming weeks can be quite ugly given the Covid lockdowns,” said Banny Lam, head of research at CEB International Investment Corp. “The situation may calm down in Shanghai in May or June, but still, the Covid controls are worrying investors. The road will remain bumpy.”
Meantime, Chinese regulators further tightened their oversight on the internet industry over the weekend, banning younger users from sending virtual gifts on livestream platforms. The latest action came despite a string of recent promises by the authorities to take a softer stance on the sector.
Authorities tried to reassure investors again on Tuesday. The onshore market has “solid” foundations for stability, according to a CCTV report citing China’s securities regulator. The short-term market fluctuations won’t change the long-term good momentum of the nation’s capital market, the report added.
The message came amid mounting concerns over growth prospects. Chinese Premier Li Keqiang warned of a “complicated and grave” employment situation as Beijing and Shanghai tightened curbs on residents in a bid to contain recent outbreaks. Chinese exports also weakened to the slowest pace since the early days of the pandemic, capturing the impact of Covid restrictions.
Large investors have also started turning away. BlackRock Inc. said it’s jettisoning its bullish stance on China given the lockdowns. Chinese authorities have made repeated promises in the past couple months to support the economy and stabilise markets, but that’s so far failed to give a sustainable boost to stock prices.
The Hang Seng Index falls 1.8% and the CSI 300 Index, a benchmark for mainland stocks, closed up 1.1%.
Meanwhile, Chinese investors are giving a cold shoulder to domestic stock funds after the world’s second-largest share market suffered its worst start to the year since 2008.
Newly launched, equities-focused mutual funds raked in a combined 144.6 billion yuan ($21.5 billion) between January and April, the lowest amount for the period in three years, according to data from consulting firm Z-Ben Advisors Ltd. Sales in April slumped to the least since August 2019.
The dismal numbers added to evidence of the low morale among Chinese investors, after the benchmark CSI 300 Index became one of the world’s worst performers amid concerns about the impact of strict Covid lockdowns in the country. A slew of recent data painted a bleak picture for the Chinese economy, ranging from weakening manufacturing activity to slowing export growth.
The mutual fund industry’s disappointing sales performance is in stark contrast to the fervour it enjoyed last year, when product launches by star stock pickers easily bagged tens of billions of dollars from investors.