SHANGHAI - Worries about the frothiness of China’s stock market and steps authorities might take to rein it in are forcing investors out of popular technology and consumer sectors and into small-cap shares and other sequestered stocks in sectors such as banking.
The Hang Seng TECH Index, which tracks Hong Kong-listed tech giants including Tencent and Alibaba Group Holding Ltd, plunged more than 6% on Monday, extending a decline that has brought the benchmark 27% off its peak hit just two weeks ago. Growth-oriented stocks have suffered globally in recent weeks from rising concerns over inflation. In China, additionally, fears that authorities are keen to reduce generous, pandemic-era stimulus has led to near-panic selling of such stocks.
In addition, comments from top banking regulator Guo Shuqing against asset bubbles last week also sent a hawkish message reminding markets that China is the world’s most-expensive market for non-financial equities. “If you’re trying to buy China quickly, the easiest thing to do is to buy an exchange-traded fund, an index fund or a big-cap consensus name,” and that has caused crowding in Moutai, Alibaba, Tencent and the like, she said.
Her portfolios include electric scooter producer Yadea Group Holdings Ltd and property management firm A Living Smart City Services Co Ltd, bought at price-earnings ratios of 8 and 11 times respectively.
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