The global tech stock rout worsens, with the China index set to set a new low.

Worries about rising interest rates fueled the global selloff in technology equities on Tuesday, with a Hong Kong benchmark tracking Chinese technology stocks closing at a record low.

The Hang Seng Tech Index, which began trading in July of last year, was down 2.5 percent from its previous close as of August 20. The index, which includes Tencent Holdings Ltd. and Alibaba Group Holding Ltd., is expected to fall for the fourth time in a row.

Investors are concerned about a bubble in megacap technology stocks that rallied during the pandemic due to increased regulatory oversight and sharp increases in yields. Chinese firms have been particularly hard hit as a result of Beijing’s regulatory drive.

The market value of the so-called Faamg group fell by $238 billion overnight, while Amazon.com Inc has lost money this year. It is now more than 45 percent lower than it was in February, and the market value of Hong Kong’s technology companies has fallen by approximately $1.4 trillion.

Bilibili Inc., an online entertainment platform, was one of the worst performers in Hong Kong

Falling by more than 5%, while Alibaba Group fell by as much as 3.7 percent. As a result, both stocks are at all-time lows. Tencent, a market leader in the industry, saw its stock drop by up to 2.5 percent.

Other Asian countries were also affected by the sell-off. It’s the worst five-month drop for SoftBank Group Corp.-backed Z Holdings Corp., while Naver Corp., dubbed the “Google of South Korea” by some, fell 3%.

Investors are concerned about how Chinese inflation and regulations will affect the sector

 According to Christina Woon, an investment manager at abrdn, in a radio interview with Bloomberg. While she acknowledged that some people are adopting a “risk-averse attitude,” she added that this is likely to continue as long as authorities do not relinquish power.

China’s technology sector has taken a beating since President Xi Jinping’s vision of “common prosperity” was implemented. There are fears that Evergrande Group, China’s indebted property developer, will go bankrupt, adding fuel to the fire.

Hong Kong was no longer Asia’s second largest market as of the end of July, falling to third place behind only Japan. In late August, the Hang Seng Index, which measures the city’s financial sector, entered a bear market. The Hang Seng China Enterprises Index, a major stock market index, had the worst year of any in 2018.

Despite the decline in the value of Chinese tech stocks, Kanterman believes “it is difficult to see trends reverse without a catalyst or resolution to the various headwinds.”


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