(Bloomberg) — Chinese tech stocks slid to a fresh low on Thursday, as concerns about the Federal Reserve’s aggressive rate hikes coupled with regulatory risks mire the sector’s outlook.
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The Hang Seng Tech Index dropped as much as 2.5% in Hong Kong before paring losses, touching the lowest since the gauge’s inception in 2020. The decline sent the gauge below its trough in March — before authorities pledged broad support. The benchmark Hang Seng Index slid as much as 1.2%, trading at the lowest since October 2011.
Risk off sentiment has deepened for Chinese growth shares in recent days after the Federal Reserve hiked interest rates by 75-basis-points and signaled further pain ahead. Weakness in the pound also hurt sentiment, as investors are concerned that the UK’s dramatic tax cuts may further fuel global inflation.
That comes against rising geopolitical tensions and a slowing economy due to pandemic-linked lockdowns. Meanwhile, many technology firms’ listing status in the US remains uncertain, as US inspectors and Chinese regulators just had a tense start when they converged to discuss about reviewing audit work paper of the companies.
“Market sentiment is on a turbulent ride, driven by fluctuation of major currencies alongside governments’ intervention,” said Banny Lam, head of research at CEB International Investment Corp, adding that a weaker yuan is also hurting high-valuation tech stocks.
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