Shares of Chinese technology companies tumbled in Hong Kong, with investors reluctant after China banned sharing giant Didi Chuxing from app stores due to data security issues.
Shares of Tencent Holdings Ltd., which owns a stake in Didi, fell by as much as 4.2% in Hong Kong, erasing their year-to-date gains, according to Arabiya Net. Shares of Meituan, which China's antitrust watchdog ordered to rectify its practices in May, lost as much as 5.9%, while the Hang Seng index of technology shares fell 2.4% to its lowest level since May 17.
"There is clearly a regulatory burden on China's tech giants at the moment, and this may continue to affect industry valuations for major internet platforms," said Matthew Kanterman, analyst at Bloomberg Intelligence.
The sector is also facing increased selling pressure from technical traders after the Hang Seng Tech indicator formed a bearish signal, dubbed a death cross, when the 50-day moving average fell below the 200-day moving average in May, according to Bloomberg.
Shares of Didi Global Inc. fell in New York on Friday, after China said it had begun a cybersecurity review of the company, just two days after it listed on the US stock market, one of the biggest offerings of the past decade. The China Cyberspace Administration announced the ban on the app on Sunday, citing serious violations related to Didi Global's collection and use of personal information, without elaborating.
"It just highlighted the regulatory policy risks that the sector faces, and there has been some quick reaction to that," said Daniel Sue, chief strategist at CMB International Securities Ltd.
He added: "The bad news has been heavily priced in, with many technology stocks trimming most or all of their gains this year."
In a commentary on Monday, the Global Times said Didi's stockpile of personal data poses a threat to individual privacy as well as to national security.
Also on Monday, authorities began conducting cybersecurity reviews on several shipping and hiring platforms.
