(Bloomberg) -- Shares of Chinese technology companies slid in Hong Kong as investors stepped back to gauge the impact from Beijing’s move to block ride-hailing giant Didi Chuxing from app stores due to data security issues.
Tencent Holdings Ltd., which has a stake in Didi, slumped 3.6% in Hong Kong to erase its year-to-date gain. Meituan, ordered by China’s antitrust watchdog to rectify practices in May, lost 5.6%, while the Hang Seng Tech Index slid 2.3% to its lowest level since May 17.
“It’s clear that there’s a regulatory overhang on China’s tech giants at the moment and that may continue to weigh on sector valuations for the large internet platforms,” according to Matthew Kanterman, an analyst at Bloomberg Intelligence.
READ: China Blocking Didi Is Another Blow to Tech Sector: Street Wrap
The sector is also facing increased selling pressure from technical traders after the Hang Seng Tech Index formed a bearish signal, dubbed as a death cross, when its 50-day moving average fell below the 200-day moving average in May.
Shares of Didi Global Inc. tumbled in New York on Friday after China said it’s starting a cybersecurity review of the company, just two days after it pulled off one of the biggest U.S. stock market debuts of the past decade. The Cyberspace Administration of China announced the app ban Sunday, citing serious violations on Didi Global’s collection and usage of personal information, without elaborating.
“The new challenges on data security and privacy and ownership and use is a bigger question as it is the monetisation of this data that is the key to these companies’ earnings,” said Joshua Crabb, a senior portfolio manager at Robeco in Hong Kong. “If that becomes at risk, the earnings and hence stock price implications could be much more dramatic than the antitrust fines we have seen so far.”
Didi’s hoard of personal data poses a threat to individual privacy as well as national security, the Global Times said in a Monday commentary that lauded China’s scrutiny of the ride-hailing giant. Also on Monday, the watchdog started cybersecurity reviews on several cargo, hiring platforms.
READ: SoftBank Tumbles as China Blocks Didi App Just Days After IPO
(Updates with closing prices.)
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