Wed. Oct 5th, 2022
Covid fears and new tech hit Chinese stocks and Macau casinos

Covid fears and new tech hit Chinese stocks and Macau casinos – Chinese stocks fell on Monday as the threat of coronavirus restrictions and a new regulatory offensive against big tech companies dented investor confidence.

Casinos in Macau’s gaming hub were forced to close for the first time since February 2020 due to the Covid outbreak, sending shares in the companies that operate them plunging and fears of a new lockdown in Shanghai eroding the broader Chinese market.

Chinese tech stocks have added to pessimism after China’s antitrust regulator slapped new fines on a number of A-listed companies, raising concerns that Beijing has still failed to ease pressure on China’s beleaguered internet giants.

Senior government officials recently said President Xi Jinping had eased his crackdown on technology and pledged to support the internet industry. The shift in rhetoric has fueled hopes that Beijing will help the private sector rescue growth at a time when China’s economic outlook is weakening.

But the latest move by the top market regulator sparked another sell-off in stocks.

Covid fears and new tech hit Chinese stocks and Macau casinos

On Sunday night, the State Administration for Market Regulation announced that it had imposed fines on a number of tech companies that violated antitrust transaction disclosure rules. The regulator released a list of 28 mergers and acquisitions involving Tencent, Alibaba, Bilibili, Sina Weibo, Lenovo and Ping An Health, which have yet to be reported to the regulator.

Alibaba (BABA) shares fell 5.8% in Hong Kong on Monday. Tencent (TCEHY) fell 2.9%. The Hang Seng Technology Index fell about 4%.

The losses were part of a broader decline in Chinese stocks. The biggest loser among Asia’s major indexes was the Hang Seng, down 2.8%. China’s Shanghai Composite fell 1.3 percent.

Shares in Macau’s casinos fell across the board after the city government ordered a week-long lockdown of most businesses, including cinemas, bars and public swimming pools. Melco International Holdings fell 7.1 percent. Sands China (SCHYF) fell 8.2% and Galaxy Entertainment (GXYEF) fell 4.9%. Fears of new restrictions in Shanghai also weighed on the market, said Stephen Innes, managing partner at SPI Asset Management.

Some Chinese cities have imposed new restrictions following the discovery of cases involving a new sub-variant, Omicron BA.5. Shanghai, which has only recently emerged from a two-month lockdown, detected its first case of the BA.5 variant on Friday and will conduct two rounds of Covid testing between July 12 and 14, a health official said on Sunday.

So far, 31 cities in China are under full or partial lockdown or imposed strict travel restrictions, affecting 247.5 million people, according to estimates released by Nomura Securities on Monday.

“Later this week (July 15), China will release its second-quarter GDP and June activity data, which will examine the extent of the economic recovery following restrictions earlier in the quarter,” Innes said.

Sale of real estate shares. embattled Evergrande onshore bondholders rejected the company’s plan to defer its debt payments beyond the July 8 deadline, according to a developer filing on Monday.

Country Garden plunged 8%. Longfor Properties and Vanke Properties fell 7% and 5.5%, respectively.

In Hong Kong, SMIC, China’s largest chipmaker, fell 2.3 percent after Reuters reported that the Biden administration was considering a ban on exports of chip-making tools to China. ASM Pacific Technology fell 1.1 percent.

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