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Hang Seng Tech index drops after US volatility

Hong Kong’s Hang Seng Tech opened 2.3 per cent lower on Tuesday, as Asia-Pacific tech shares dropped after a volatile day of trading across global markets.

The Hong Kong tech marker was dragged down by slides from Chinese companies as markets reacted to the prospect of the US Federal Reserve rapidly unwinding stimulus measures.

Video-sharing app Kuaishou fell more than 3 per cent, food delivery platform Meituan lost 2.1 per cent and internet group Tencent dropped 1.1 per cent. Jack Ma’s ecommerce group Alibaba declined almost 1.7 per cent.

Investors have grown anxious about the speculative tech stocks that lifted markets from coronavirus pandemic-driven routs last year and are shifting out of equities seen as vulnerable to expected interest rate rises by the Fed.

The bleak start across the region included falls for Australia’s S&P/ASX 200 index of 2.5 per cent, for Japan’s Topix of 2.4 per cent and South Korea’s tech-heavy Kospi of almost 3 per cent.

Hong Kong’s broader Hang Seng index was down 1.5 per cent after opening with a slide of 2.1 per cent, while China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks shed 1.3 per cent.

The market tremors come as the Cyberspace Administration of China, the country’s internet regulator, on Tuesday announced a one-month “clean cyber space” campaign to target online abuse, “chaos” among celebrity fan groups and other issues during the lunar new year holiday.

Over the past year, Beijing has ramped up efforts to control online content that it sees as “polluting the internet environment” as part of a broader crackdown on the tech sector.

Andy Maynard, global head of equities at investment bank China Renaissance in Hong Kong, said the moves reflected nervousness about the prospect of tighter monetary policy as well as escalating US-Russia tensions over possible military action in Ukraine.

“Long term [we are] still positive on equities locally, but near-term, volatility is likely to be the trend,” he said.

“Tech is still hurt by ongoing regulatory and government-induced changes to their operating landscape. Beijing still doesn’t seem to have finished, making [it difficult] for the sector in the short to long term.”

In Asia, trading in the 10-year US Treasury bond yield was at 1.8 per cent, marking little change. Bond yields rise as prices fall.

Traders sought out safer US government debt on Monday following a sell-off in equities that resulted in Wall Street’s tech-focused Nasdaq Composite falling 4.9 per cent before rebounding.

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