Hong Kong Tech Giants Extend Decline on Hawkish Fed Jitters
By Ambar Warrick
Investing.com-- Hong Kong-listed Chinese technology stocks slid further on Tuesday, tracking losses on Wall Street as a hawkish signal from the Federal Reserve rattled the sector.
China’s big three tech stocks, the BATs trio - Baidu Inc (HK: 9888 ), Alibaba Group Holding Ltd (HK: 9988 ), and Tencent Holdings Ltd (HK: 0700 ), fell between 1.2% and 2% in Hong Kong trade. Alibaba (NYSE: BABA ) and Baidu's (NASDAQ: BIDU ) U.S. listings also fell sharply on Monday.
The three were among the biggest weights on the Hang Seng index , which lost around 1% after a 0.7% loss on Monday.
Other tech majors, including Alibaba Health Information Technology Ltd (HK: 0241 ) and Lenovo Group (HK: 0992 ) also sank over 3%.
Tech stocks have now extended losses into a third straight session after Fed Chair Jerome Powell said the central bank has no plans for a dovish pivot, and that it will keep hiking rates aggressively. His comments drove up the dollar and Treasury yields.
Rising interest rates are negative for tech stocks, as they discount future earnings from the sector against a stronger dollar. Traders are now penciling in a greater chance of a 75 basis point hike by the Fed in September.
Fears of this pulled the NASDAQ Composite index down over 5% in the last two sessions. Rising interest rates have also cost the NASDAQ over 20% of its value this year.
After a record-breaking run over the past two years, the outlook for technology stocks has now soured, as more countries begin hiking interest rates to combat inflation.
But Chinese tech majors have been hit even harder than their global counterparts, as a regulatory crackdown by Beijing over alleged antitrust violations dented sentiment.
Slowing economic growth in China has also weighed heavily on earnings this year.
Baidu is set to report quarterly earnings later in the day. Its peers Alibaba and Tencent had both logged better-than-feared results in the June quarter.
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