Chinese tech stocks slumped tracking losses of U.S. peers overnight weighing on the risks from the national’s Covid Zero policies and lack of measures to support the sector.
The Hang Seng Tech Index inched down as much as 4.5% on Friday underscoring fourth day straight declining session.
The Nasdaq Golden Dragon China Index slipped 7.7% as investors erasing the Fed’s monetary tightening. The development highlights Chinese authorities yet to come with concrete steps to support the sector and reassuring the investor’s confidence.
“Although the valuation for Chinese tech giants have been largely beaten down over the past one year, we may have to see a clear control of China’s virus situation or more follow through in support measures in order to lift market confidence,” said Jun Rong Yeap, a strategist at IG Asia Pte as reported by Bloomberg.
“With relief catalysts such as earnings seasons and Fed meeting largely behind us now, markets are in need of a new relief catalyst.”
The Hang Seng Index was down as much as 3.5%, while on the mainland, the benchmark CSI 300 Index slid more than 2.59%.
“No one who has been trading in the China market for any period of time has realistically expected a relaxation to Covid policies in the short term,” said Chen Yicong, managing director at Beijing Chengyang Asset Management. He added that Friday’s moves are more likely from the impact of U.S. declines.