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China's Tech Selloff. Time to Buy the Dips?
2021-07-08 • Updated
China’s tech companies have lost $823 billion in total since their February highs. The losses are huge! What’s the reason? Beijing expands its crackdown on the technology sector and this fact worries investors as the selloff may be far from over.
China’s authorities tighten the rules for the country’s largest companies, especially for those who are listed overseas or looking for selling their stocks abroad. It happened after Didi, China’s Uber, went public in the US. That triggered the sell-off of other China’s tech giants such as Tencent, Alibaba, JD.Com Inc., Baidu, and Meituan.
“The selling will continue in the third quarter. The measures from authorities will keep coming,” said Pegasus Fund Managers.
Most investors are going to take a “sell first, talk later” approach to reduce risks in their portfolio, claimed United First Partners.
“In case the market sentiment goes into extreme pessimism and we see the Hang Seng Tech Index down 20% from here, it could be a rare opportunity to buy some fast-growing Chinese internet companies at extremely attractive prices,” GAM’s Jian Shi claimed.
*We will analyze the Hang Seng Index (HK50), which is available for trading with FBS. If you notice, the quote above tells about the Hang Seng Tech Index, but both the indices are strongly correlated with each other.
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