SHANGHAI (Reuters) – China’s technology and chip sectors came under fresh selling pressure on Tuesday after state media attacked the country’s largest social media and video game firm, Tencent Holdings Ltd, and regulators said they are launching an investigation into chip distributors in the auto industry.
The broadside comes days after the securities regulator and state media sought to soothe investor fears over the pace and breadth of market reform.
The following are quotes from analysts, strategists and market watchers.
ALEX WONG, DIRECTOR, AMPLE FINANCE GROUP, HONG KONG
“We don’t like the recent news flow from the regulatory side. We are reducing our exposure in those sectors which have a higher risk of being regulated. But we are not reducing a lot of exposure in Hong Kong. Actually we are shifting our exposure to some sectors like manufacturing or electric vehicles, or some consumption brand names because they would be less policy-sensitive.
“We need to see whether this will develop into something horrible … I think people have been used to the policy risk in China, so they are expecting some kind of loosening coming if things really turn south. So I think that is why the market actually is not too bad right now, but I think the risk is actually quite high this time because the news flow continues to come out. We have not seen the end of this wave of regulations so people will be staying out from those sectors which have higher risk.”
ETHER YIN, PARTNER AT TRIVIUM, A BEIJING-BASED CONSULTANCY
“(The share price moves) showed how investors are jumpy these days. They don’t believe anything is off limit and will react, sometimes over react, to anything on state media that fit the tech crackdown narrative.
“Government will not and can not get rid of gaming industry. The official line continues to be keeping the kids from getting addictive to games. And that’s been the policy of the land since 2018. The industry is already subject to heavy regulations, like annual quota of new games and restricting amount of time minors can play games. Those restrictions will stay but not much room to go tighter.”
(Reporting by Andrew Galbraith in Shanghai; Compiled by Vidya Ranganathan; Editing by Muralikumar Anantharaman)
