Chinese stocks fell on Monday as the threat of new Covid restrictions and a renewed regulatory offensive against major tech companies sapped investor confidence.
Casinos in Macau’s gambling hub were ordered to close for the first time since February 2020 due to the outbreak of the Covid virus, which sent shares of its operating companies plummeting, and fears of new closures in Shanghai have undermined the broader China market.
Add to the pessimistic mood, Shares of technology companies in China fell after the country’s antitrust body imposed new fines on a group of first-listed companies, raising fears that Beijing is still not taking the pressure off the beleaguered internet giants in the country.
Senior government officials He had recently reported an easing of President Xi Jinping’s strict technology crackdown, and pledged support for the internet sector. The change in rhetoric has raised hopes that Beijing will support the private sector in helping to rescue growth at a time when China’s economic outlook is weak.
But the latest move of the largest market regulator sparked a new sell-off of shares.
Late Sunday, the State Administration for Market Regulation said it had fined a number of technology companies for breaching antitrust rules on transaction disclosure. The watchdog released a list of 28 mergers and acquisitions involving Tencent, Alibaba, Bilibili, Sina Weibo, Lenovo and Ping An Health, which it said had not been reported to the regulator.
Alibaba (Alibaba) shares fell 5.8 percent in Hong Kong on Monday. Tencent (TCEHY) is down 2.9%. Hang Seng Tech is down about 4%.
The losses were part of a broad decline in Chinese stocks. The biggest loser among the major indices in Asia was the Hang Seng – down 2.8%. China’s Shanghai Composite Index fell 1.3%.
Macau casino shares fell across the board after the city government ordered the closure of most business operations for a week, including movie theaters, bars and public swimming pools. Melco International Development dropped 7.1 percent. Sands China (SCHYF) lost 8.2% and Galaxy Entertainment (GXYEF) fell 4.9%.
Stephen Innes, managing partner of SPI Asset Management, said fears of new restrictions in Shanghai also affected the market.
Several Chinese cities have imposed new restrictions after cases were discovered related to the new variant Omicron BA.5. Shanghai, which recently emerged from a two-month lockdown, identified its first case of BA.5 on Friday and will conduct two rounds of Covid tests between July 12 and July 14, a health official said on Sunday.
So far, 31 Chinese cities are under complete or partial lockdown or have severe movement restrictions in place, affecting 247.5 million people, according to Nomura estimates published on Monday.
“Later this week (July 15), China will release second-quarter GDP data and June activity, which will be examined for the extent of the economic recovery after restrictions earlier this quarter,” Innes said.
The property shares were sold. Embattled Evergrande’s domestic bondholders have rejected the company’s plan to continue delaying its debt payments beyond the July 8 deadline, according to a report filed by the developer Monday.
Country Garden shares fell 8%. Longfor Properties and Vanke Real Estate are down 7% and 5.5%, respectively.
In Hong Kong, the largest share in China The chip maker – SMIC – lost 2.3% after Reuters reported that the Biden administration is considering banning the export of chip-making tools to China. ASM Pacific Technology stock fell 1.1%.
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