Shares in Hong Kong declined sharply in Monday afternoon trade, wiping out its gains for the year. The slump came as Chinese tech and education stocks dipped on regulatory pressure. Moreover, the drop was also prompted as a summing between Beijing and the U.S. got off to an acrimonious start, reducing investor sentiment.
Additionally, the broader Asia-Pacific markets were mixed, with mainland Chinese stocks also slumping.
Hong Kong’s Hang Seng index dropped by 4.13%, or 1,129.66, to 26,192.32.
Meanwhile, Hong Kong-listed shares of Chinese tech giant Tencent fell by 7.61% in Monday afternoon trade. An e-commerce giant, Alibaba, also sank 5.17%, whereas Meituan dropped 9.15%. The Hang Seng Tech index fell 6.58% to close at 6,790.96.
Earlier, China’s antitrust regulator ordered Tencent to give up its exclusive music licensing right. Moreover, it also slapped a fine on it for anti-competitive behavior. Remarkably, it marked another development in Beijing’s ongoing crackdown on its domestic internet giants. These all contributed to losses.
Furthermore, the private education company’s shares, listed in Hong Kong, also declined after Chinese authorities placed restrictions on the sector. Moreover, shares of New Oriental Education & Technology Group, Koolearn Technology and China Beststudy Education Group all fell by more than 30% each.
China-U.S. geopolitical strains have weighed on investor sentiment
Moreover, Mainland Chinese stocks also fell. Shanghai Composite dipped by 2.42% or 82.96, to 3,467.44. Besides, the Shenzhen Component dropped 2.65%, or 397.72, to 14,630.85.
China-U.S. geopolitical strains have weighed on investor sentiment as a high-level meeting between the two largest economies got off to an acrimonious start.
On Monday, during Monday talks with the U.S. deputy secretary of state, China’s vice foreign minister announced that the two countries’ relationship faces serious difficulties.
Moreover, in South Korea, Kospi fell by 0.91% or 29.47 to 3,224.95. In Australia, the S&P/ASX 200 slightly fell.
Japanese stocks rose after holidays on Thursday and Friday. The Nikkei 225 jumped 1.05%, or 285.29, to 27,833.29, whereas the Topix index surged 1.1%.
The COVID-19 situation in Asia weighs on sentiment
Investors are concerned about the COVID-19 situation in Asia as it weighs on sentiment.
In South Korea, the second-highest level of virus restrictions will be applied to non-capital areas starting July 27. Moreover, Tokyo’s daily COVID-19 infections has surpassed 1,000 for six days in a row.
On Sunday, Indonesia extended its COVID-19 restrictions by a week as it is facing an increasing number of coronavirus infections.
The Dow Jones Industrial Average gained 0.68%, or 238.2 to 35,061.55. Meanwhile, the S&P 500 surged 1.01% to 4,411.79. The Nasdaq Composite surged 1.04%, or 152.39, to 14,836.99.