Chinese tech stocks fall on US blacklistings and hawkish rate outlook

Chinese technology companies fell on Friday after being targeted by US investment blacklists and as hawkish signals on monetary policy from the US Federal Reserve and other central banks hit growth stocks around the world.

Hong Kong’s Hang Seng Tech index lost as much as 2.7 per cent in morning trading. Travel booking website Trip.com led losses, falling as much as 11.3 per cent after earnings released on Thursday revealed it had swung to a loss in the last quarter.

Chinese online healthcare platform JD Health dropped as much as 7.5 per cent, while video website Bilibili and ecommerce group Alibaba’s Hong Kong-listed shares shed as much as 5.8 per cent and 4 per cent, respectively.

Friday’s losses took the Hang Seng Tech index down more than 7 per cent since markets opened on Monday, erasing gains last week after China’s central bank unleashed $188bn of liquidity into the financial system.

The index has dropped more than 30 per cent in the past year as a result of a regulatory crackdown that has hit tech companies including Alibaba, ride-hailing leader Didi Chuxing and internet group Tencent.

The pressure on tech companies comes as China’s president Xi Jinping pushes a “common prosperity” campaign designed to redistribute wealth and regulate high incomes.

Markets in Asia-Pacific joined a global decline for the tech sector that began in the US on Thursday, following the Federal Reserve’s decision to accelerate the pace at which it will raise interest rates. Tech stocks are particularly sensitive to interest rates, as their value is based on the prospect of future growth, which is diminished by higher borrowing costs.

The selling spread across Asia on Friday, with share price losses for Japanese companies Fujitsu and SoftBank Group and steep declines for some mainland-listed Chinese tech companies.

Washington has placed a large number of Chinese companies on investment and export blacklists this month for alleged involvement in Beijing’s human rights abuses.

“The Wall Street tech retreat overnight has had a similar effect on Asian markets with similar weightings, with the US addition of another swath of Chinese companies to their ‘entity list’ also weighing on sentiment,” said Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA, in a note.

Laggards in the US on Thursday included chipmakers Nvidia and Advanced Micro Devices, two of the best-performing large-cap Wall Street equities this year, which fell 6.8 per cent and 5.4 per cent, respectively. Tesla, Adobe and Qualcomm also came under pressure, shedding 5 per cent, 10.2 per cent and 5.9 per cent, respectively.

On Thursday, Washington revealed a list of 37 companies and institutions it would add to its “entity list”, which bars US companies from exporting technology and products that originated in America to them. Most of the entities were Chinese.

That followed news on Wednesday that the US was adding eight Chinese companies — including dronemaker DJI and image recognition software company Megvii — to its investment blacklist for their role in alleged human rights abuses in Xinjiang.