Hong Kong's stock market Wednesday replicated Wall Street's overnight shift to old-economy stocks from technology stocks – and then some.
Big tech stocks in Hong Kong ended the day with losses of 6% to 10%, more than twice the declines of U.S. heavyweights such as Facebook and Amazon.com in North American trading Tuesday. Among big Chinese technology names, Alibaba Group tumbled 9.8%, e-commerce firm Meituan plunged 9.67% and Tencent Holdings dropped 7.39%.
Investors moved money into beaten-down value stocks, leaving the benchmark Hang Seng index relatively unscathed, down 0.28% at 26,226.98.
Portfolio managers in Hong Kong Wednesday said the flight from highly valued technology stocks was a global story but one with a strong China angle – in the wake of last week's surprise last-minute move by regulators in Beijing to block a record initial public offering by Ant Group, Alibaba's internet payments and finance affiliate.
The rotation to old-economy stocks that began in the U.S. — prompted by news of a potential COVID-19 vaccine — continued in Asia but became "more and more of a China story" as the session wore on, said Ken Wong, a Hong Kong-based client portfolio manager and Asian equity portfolio specialist with Eastspring Investments.
The U.S. sell-off trickled to Asia, but another reason behind the sell-off and the one "that has greater implications (was) the report that China's government could be tightening regulations, especially around China internet, e-commerce/digital businesses," said Paul Sandhu, Hong Kong-based head of multiasset quant solutions and client advisory Asia-Pacific with BNP Paribas Asset Management.
Thomas Li, Hong Kong-based investment specialist, emerging markets and Asia-Pacific equities with J.P. Morgan Asset Management, said: "The market may be reflecting some concern around potentially tighter regulatory scrutiny on various internet companies and sub-sectors," as regulators move to prevent and curb antitrust activities, secure fair competition, protect consumer and social interests, and foster healthy growth.