Hong Kong: As concerns about China’s regulatory crackdown continue to reverberate in the trading floor, most Asian markets fell again on Wednesday, and analysts said that the company may be unable to maintain its heavy earnings performance that has caused a surge in valuation recently.
After Beijing introduced a series of measures aimed at curbing industries including technology and private tutoring, Hong Kong and Shanghai suffered terrible torture in the first three days, which raised concerns about further action.
The struggle in Asia is reflected in New York, with the Nasdaq index leading the decline. Although some of the selling has been attributed to profit taking after the three indexes hit record highs for several consecutive trading days, analysts said that the unease about China’s measures played a role.
“The turmoil in tech stocks in China is finally bleeding into US tech stocks,” said Chris Murphy, of Susquehanna International Group, adding that he was “concerned investors will lighten up in general” after major tech earnings heading into “a seasonably weak period for equities”.
When Murphy made the above remarks, Apple, Google’s parent company Alphabet and Microsoft all announced better-than-expected performance, but their stock prices fell after the market.
OANDA analysts said: “Given the continuing struggles in the supply chain, concerns about China’s economic growth, and uncertainty about how much monetary and fiscal support the economy will receive, the key conclusion drawn from this anger over gains is, Risk appetite may struggle in the future.” Edward Moya.
“Wall Street has priced lower interest rates for a longer period of time, and now we need to see whether the current delta variant concerns will allow the Fed to postpone any hints of reduction announcements until the end of the year.”
The Fed will be watching its latest policy meeting to end later on Wednesday, and in light of the economic recovery, reopening, and the spread of the Delta variant that has caused a surge in infections, it will pay close attention to any guidance on its plan.
In the morning, Hong Kong rose slightly, but it fluctuated in the morning, with a decline of more than 9% in the first three days. The tuition company enjoyed some respite, but the technology giant Tencent continued to be under selling pressure.
Shanghai fell again.
In view of the recent stock market plummet and in order to eliminate some volatility, the mainland official media tried to calm investors’ nervousness, saying that the market may soon stabilize and the new rules will prove beneficial to the economy in the long run.
“Securities Times” stated in a front-page editorial that the sell-off “to a certain extent reflects the misunderstanding of policies and the catharsis of emotions by some funds”, but the fundamentals of the economy have not changed.
“Although some industry policy adjustments may affect its current business model, in the medium and long term, it will help release more social vitality and help consumption in most other areas,” it added.
At the same time, the “China Securities Journal” stated that there is no need to be pessimistic, while the “Shanghai Securities News” quoted analysts as saying that the decline provides a good buying opportunity.