China Tech Stock Gauge Falls to Record Low as Yields Rise
(Bloomberg) -- A benchmark tracking Chinese technology stocks closed at a fresh record low Wednesday, as concerns about inflation amid a worsening energy crunch pushed global bond yields higher.
The Hang Seng Tech Index, which officially launched in July last year, dropped 1.5% in a fifth day of declines to close below its previous Aug. 20 low. The rise in bond yields revived fears about the sector’s valuation, wiping out earlier gains in the benchmark following an overnight rebound in U.S. tech stocks.
The 10-year Treasury yield rose above 1.55% and the 30-year equivalent reached the highest since June.
“Tech stocks were most vulnerable for a pullback in recent months, as the sector was priced to perfection, or in some cases, priced well above perfection,” wrote David Bahnsen, chief investment officer of The Bahnsen Group.
The Hang Seng Tech gauge is down 46% from its February record, with its members losing about $1.4 trillion in market value. The Treasury yield advance in recent weeks has added to concerns about China’s sweeping regulatory crackdown as part of President Xi Jinping’s vision of “common prosperity.”
Among internet oriented stocks, heath-tech shares JD Health International Inc. dropped 7.5%, the most since Aug. 20, to become top loser on the Hong Kong measure. Sector bellwether Tencent Holdings Ltd. finished 0.8% lower.
Concerns about rising input costs also seeped into Asian semiconductor stocks. South Korea’s chip giant Samsung Electronics Co. Ltd. dropped 1.3% extending its yearly decline to about 12%. Taiwan Semiconductor Manufacturing Co. closed 0.2% lower after earlier falling as much as 1.2%.
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