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Sector
Financials
Size
Mid Cap
Market Cap £782.6m
Enterprise Value £1.27bn
Revenue £319.4m
Position in Universe 1033rd / 6093

Alibaba leads drop among tech giants after China drafts anti-monopoly rules

Wed 11th November, 2020 7:00am
HONG KONG, Nov 11 (Reuters) - Hong Kong-listed tech giants
fell on Wednesday after China published draft rules aimed at
preventing monopolistic behaviour by internet platforms, setting
the city's benchmark technology index for its worst session in
four months.
    The Hang Seng Tech Index  .HSTECH , tracking 30 major
technology-related stocks, fell as much as 5.9% to 7,495.34,
poised for its worst day since July 16. That followed a 5.2%
drop in the previous session, and lagged a 0.3% gain in the
city's benchmark Hang Seng index  .HSI . 
    The anti-monopoly rules could increase the scrutiny on
e-commerce marketplaces and payment services such as Chinese
giant Alibaba Group  BABA.N   urn:newsml:reuters.com:*:nL1N2HW0D1
    China's State Administration for Market Regulation, which
issued the draft, said it wanted to prevent platforms from
dominating the market or from adopting methods aimed at blocking
fair competition.
    The definitions it provided for internet platforms mean the
new rules could apply to e-commerce sites such as Alibaba's
Taobao and Tmall marketplaces or JD.com  JD.O  and payment
services such as Ant Group's  688688.SS  6688.HK  Alipay or
Tencent Holding  0700.HK  WeChat Pay. Food delivery platform
Meituan  3690.HK  could also be included. 
    "The latest policy raised concerns over those companies'
future business outlook," said Steven Leung, a Hong Kong-based
executive director at UOB Kay Hian. "Besides, after Pfizer Inc's
 PFE.N  vaccine progress, we already saw a very major shift from
new economy to old economy stocks."
    Hong Kong shares of Alibaba Group  9988.HK  plunged 8.9% to
the lowest since Aug. 21, set for their worst day since the
trading debut in the city on Nov. 26, 2019.
    Meituan  3690.HK  dropped 8%, JD.Com  9618.HK  fell 7.9%,
and Tencent  0700.HK  was down 5.7%.
    "We believe enforcement of the new guidelines will not be
easy, as monopolistic practices are usually conducted in a very
elusive manner such that it is often difficult to find solid
evidence to take action," Nomura said in a note.
    "We believe the guidelines, if strictly enforced, could
weaken the bargaining power of those big platforms in dealing
with merchants," Nomura added.
    Among the tech index constituents, chipmaker SMIC  0981.HK 
dropped 7.2%, software developer Kingdee  0268.HK  plunged
6.7%handset maker Xiaomi  1810.HK  fell 5.7%, and computer maker
Lenovo  0992.HK  slid 2.5%. 

 (Reporting by Donny Kwok in Hong Kong and Luoyan Liu in
Shanghai; Editing by Vidya Ranganathan and Sherry
Jacob-Phillips)
 ((Reuters Messaging:
donny.kwok.thomsonreuters.com@reuters.net))
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