https://www.scmp.com/business/artic...t-says-chinese-tech-stocks-rout-persist-until
Business
The lone bear on Alibaba and Tencent says Chinese tech stocks’ rout to persist until China can enunciate end of crackdown
Cheryl Heng
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Published: 10:24am, 19 Aug, 2021
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The trillion-dollar rout afflicting
Chinese technology stocks
may not end until China’s government restores investors’ trust in the securities, as shareholders had been left defenceless by the aftermath of unexpected regulatory crackdowns.
That is the view of Manuel Muhl of DZ Bank, a Frankfurt-based lender, who downgraded China’s internet platform sector last month, making him the
only analyst globally with a “sell” rating
on the industry torch-bearers
Alibaba Group Holding
and
Tencent Holdings
. Alibaba owns the Post.
A loss of trust due to corporate governance lapses in the case of
Didi Global
, and tightening regulations in China’s internet economy from
e-commerce
to for-profit
off-campus tutoring
have thrown a wrench into fundamental stock valuation models.
“For the sector to hit bottom, and potentially recover, the government needs to restore the trust that it has destroyed,” Muhl said in an interview. “This can only be achieved by reaching a point where they can publicly state that their crackdown has reached its goal and that they are done for now. When will that be?”
Alibaba, the biggest Hang Seng Index constituent,
slumped 5.5 per cent
to HK$162.10 on Thursday, its lowest level since its 2019 listing. Tencent retreated by 3.4 per cent to HK$421.20 after warning shareholders against slowing growth amid increased regulatory scrutiny. The Hang Seng Tech Index lost 2.8 per cent.
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Business
The lone bear on Alibaba and Tencent says Chinese tech stocks’ rout to persist until China can enunciate end of crackdown
- For the sector to hit bottom and potentially recover, the government needs to restore the trust among global investors, Muhl at DZ Bank says
- China remains ‘a classic stock picker’s market,’ says Capital Group, which manages about US$2.6 trillion of assets
Cheryl Heng
+ FOLLOW
Published: 10:24am, 19 Aug, 2021
Why you can trust SCMP
Advertisement
The trillion-dollar rout afflicting
Chinese technology stocks
may not end until China’s government restores investors’ trust in the securities, as shareholders had been left defenceless by the aftermath of unexpected regulatory crackdowns.
That is the view of Manuel Muhl of DZ Bank, a Frankfurt-based lender, who downgraded China’s internet platform sector last month, making him the
only analyst globally with a “sell” rating
on the industry torch-bearers
Alibaba Group Holding
and
Tencent Holdings
. Alibaba owns the Post.
A loss of trust due to corporate governance lapses in the case of
Didi Global
, and tightening regulations in China’s internet economy from
e-commerce
to for-profit
off-campus tutoring
have thrown a wrench into fundamental stock valuation models.
“For the sector to hit bottom, and potentially recover, the government needs to restore the trust that it has destroyed,” Muhl said in an interview. “This can only be achieved by reaching a point where they can publicly state that their crackdown has reached its goal and that they are done for now. When will that be?”
Alibaba, the biggest Hang Seng Index constituent,
slumped 5.5 per cent
to HK$162.10 on Thursday, its lowest level since its 2019 listing. Tencent retreated by 3.4 per cent to HK$421.20 after warning shareholders against slowing growth amid increased regulatory scrutiny. The Hang Seng Tech Index lost 2.8 per cent.
READ FULL ARTICL e
