Shares of major companies in Hong Kong's Hang Seng Tech Index (HSTECH) showed a decline at the beginning of the week. The daily session of the HSTECH index on Tuesday closed at -3.34% negative. Considering the trend of the index dynamics, it should be emphasized that the total index value for the month fell to -12.22%, the annual drop was -20.89%. Such a fall, as noted by analysts, due to the gradual refusal of state companies from the services of international consulting organizations, included in the list of "Big Four" countries. In addition, China is refusing to hire foreign employees for accounting positions, especially in offshore companies. These measures, according to experts, are primarily aimed at ensuring the information security of companies both in mainland China and in Hong Kong.
Returning to the Hong Kong index, it should be said that the overall result of its fall is significantly influenced by the shares of large Chinese companies in the technology sector. Thus, shares of such companies as Bilibili, Alibaba, Kuaishou and JD.com became the leaders of the fall. The range of divergence is approximately from -4.0 to -8.9%.
JD.com suffered a big drop in trading on the Hong Kong Stock Exchange. Its shares fell to -11.03 percent. This Chinese e-commerce giant published the start of a $1.5 billion subsidy campaign to compete with the fast-growing budget shopping app Pinduoduo from PDD Holding. The reason for the campaign is to maintain a low-price policy in the e-commerce market. Similar initiatives have also been published by NetEase Inc. and miHoYo, which intend to strengthen the fight against gaming leader Tencent Holdings Ltd. At the same time, search engine operator Baidu Inc. released a new chat service powered by artificial intelligence to compete in revenue with Alibaba Group and Tencent.
Analysts have argued that the drop in the capitalization of big tech companies and the generation of competition in the market has arisen after the Chinese government adopted strict regulatory rules to weaken the influence of the tech sector in the economy. Beijing has also pushed some bigtech companies to sell 1% of their shares to the government to increase its involvement in these companies.
Finally, we would like to note that similar rhetoric already existed in 2021, when the Chinese government obtained a 1% stake and a board seat in Beijing ByteDance Technology's key division. At that time, many analysts perceived such a move as an attempt to limit the influence of large technology companies and their access to data. This practice is likely to continue for some time, and the Chinese government will increasingly seek to control tech companies by bringing them into the ranks of state-owned enterprises.
Returning to the Hong Kong index, it should be said that the overall result of its fall is significantly influenced by the shares of large Chinese companies in the technology sector. Thus, shares of such companies as Bilibili, Alibaba, Kuaishou and JD.com became the leaders of the fall. The range of divergence is approximately from -4.0 to -8.9%.
JD.com suffered a big drop in trading on the Hong Kong Stock Exchange. Its shares fell to -11.03 percent. This Chinese e-commerce giant published the start of a $1.5 billion subsidy campaign to compete with the fast-growing budget shopping app Pinduoduo from PDD Holding. The reason for the campaign is to maintain a low-price policy in the e-commerce market. Similar initiatives have also been published by NetEase Inc. and miHoYo, which intend to strengthen the fight against gaming leader Tencent Holdings Ltd. At the same time, search engine operator Baidu Inc. released a new chat service powered by artificial intelligence to compete in revenue with Alibaba Group and Tencent.
Analysts have argued that the drop in the capitalization of big tech companies and the generation of competition in the market has arisen after the Chinese government adopted strict regulatory rules to weaken the influence of the tech sector in the economy. Beijing has also pushed some bigtech companies to sell 1% of their shares to the government to increase its involvement in these companies.
Finally, we would like to note that similar rhetoric already existed in 2021, when the Chinese government obtained a 1% stake and a board seat in Beijing ByteDance Technology's key division. At that time, many analysts perceived such a move as an attempt to limit the influence of large technology companies and their access to data. This practice is likely to continue for some time, and the Chinese government will increasingly seek to control tech companies by bringing them into the ranks of state-owned enterprises.