Volatility Grips Chinese Tech Shares Again as Traders On Edge

(Bloomberg) -- Shares of some of the biggest China tech firms whipped around in a volatile trading session Thursday, underscoring high investor angst in a sector mired in regulatory crackdowns.

Hong Kong’s Hang Seng Tech Index closed 1% higher, paring an advance of as much as 4.4% earlier in the day. The move came after wild swings hit Chinese stocks a day earlier, with key benchmarks tumbling more than 3% before paring at the close. 

Investors have been burned repeatedly buying dips in Chinese tech giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. in the past year. Beijing’s clampdown on private enterprise appeared to intensify in recent weeks after authorities required food delivery platforms to cut fees they charge restaurants and warned of risks in investing in products linked to the metaverse.

Since its February 2021 peak, the China tech gauge has slumped nearly 60%. Adding to the fragile sentiment are concerns about a potential interest rate hike from the U.S. Federal Reserve next week and elevated commodity prices fueled by the war in Ukraine. 

“Investors may be looking to sell growth names into the brief rallies to reduce their risk exposure, given multiple headwinds including Russia and the upcoming rate hikes,” said Vey-Sern Ling, a senior analyst at Union Bancaire Privee.

Traders are also looking ahead to earnings to gauge the health of the sector. E-commerce giant JD.com Inc. is set to report after close on Thursday. A measure of volatility on the Hang Seng Index surged to the highest level since May 2020 earlier this week. 

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