listed in Hong Kong On Tuesday, Chinese technology stocks fell even more, just like stocks on Wall Street, after a hawkish signal from the Federal Reserve shook the industry.
Related: Hong Kong hasn’t discussed reducing property stamp duty.
In Hong Kong trade, Baidu Inc (HK:9888), Alibaba Group Holding Ltd (HK:9988), and Tencent Holdings Ltd (HK:0700), China’s top three technology companies, slumped between 1.2% and 2%. On Monday, Alibaba’s (NYSE:BABA) and Baidu’s (NASDAQ:BIDU) U.S. listings also dropped significantly.
The three stocks were among the most heavily weighted on the Hang Seng index, which fell around 1% on Tuesday after falling 0.7% on Monday.
Other prominent technology firms, such as Alibaba Health Information Technology Ltd. (HK:0241) and Lenovo Group (HK:0990), fell by more than 3%.
Fed Chair Jerome Powell’s statement that the central bank has no intention of a dovish turn and will continue rapidly rising rates has resulted in a third consecutive session of losses for the tech sector. His remarks caused the currency and Treasury rates to rise.
Related: Response to Alibaba’s request for a dual primary listing in Hong Kong
Rising interest rates are unfavourable for technology equities because they devalue the sector’s future earnings against a stronger dollar. Traders now anticipate a stronger likelihood of a September rate rise by the Fed of 75 basis points.
The NASDAQ Composite index declined by more than 5% over the course of the past two trading sessions due to concerns around this issue. In addition to rising interest rates, the Nasdaq has lost nearly 20% of its value this year.
As more governments raise interest rates to fight inflation, the outlook for technology companies has gotten worse after they had a record-setting two years.
But Beijing’s crackdown on suspected antitrust violations has hurt Chinese internet giants more than their competitors around the world.
China’s slowing economic development has also had a significant impact on earnings this year.
Baidu will publish its quarterly profits later today. In the June quarter, Alibaba and Tencent posted better-than-anticipated profits.
Related: In Hong Kong, China Evergrande is being sued for closing down.
Hong Kong Tech Giants’ Drop Extends Due to Fed Uncertainty