Hong Kong Stocks Drop as Trump Targets China Tech

Some big losers today were Xiaomi, Galaxy Entertainment, and Sands China
Anthony RussoOct 08,2020,15:15

Hong Kong stocks ended lower Thursday on the news that the Trump administration could put new restrictions on Chinese tech giants.

Washington is considering putting restrictions on the fintech arm of Alibaba (NYSE: BABA; HKEX: 09988) Ant Group and the gaming giant Tencent (HKEX: 00700) on fears of their digital payment platforms threatening U.S. national security, as reported by Bloomberg Wednesday, citing people familiar with the matter.

At the closing of trading Thursday, the Hang Seng Index was sent nearly 50 points lower to 24,193.35 points. Today’s decline snapped a four trading day winning streak for the benchmark.

The biggest losers on the HSI today were the smartphone maker Xiaomi, (HKEX: 01810) which plummeted nearly 4% to HK$20.85 per share. Some other big losers were casino operators Sands China (HKEX: 01928) and Galaxy Entertainment Group, (HKEX: 00027) whose shares dropped nearly 3% and 2%, respectively.

“The Hang Seng is down today because of potential new measures from the US on more Chinese companies,” Kenny Wen, a wealth management strategist at Everbright Sun Hung Kai, said, as cited by The South China Morning Post.

He added, “Also, tech stocks have been quite overbought recently.”

Meanwhile, Tencent ended the day trading flat at HK$535 per share.

As for Ant Group, controlled by Chinese billionaire Jack Ma, it is the middle of seeking concurrent IPO’s in both Hong Kong and Shanghai. However, Bloomberg noted that the potential move by Washington could disrupt the dual-listing, which could happen as soon as this month. Ant Group has already got the green-light from the Shanghai Stock Exchange but is still awaiting a hearing with the Stock Exchange of Hong Kong. The massive dual-listing, which could draw $35 billion, could become the world’s largest IPO ever.

“China is going to pay a big price [for] what they’ve done to this country," said President Trump.

According to Bloomberg, a final decision on whether to impose restrictions on Tencent and Ant Group’s payment platforms are not imminent.

Topics:Jack Ma, Ant Group, Alibaba, Tencent, Xiaomi, Galaxy Entertainment, Sands China, Trump