FirstFT: China regulation fears hit Tencent shares

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World updates

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Chinese tech stocks plunged for a third day as investor fears mounted over a broadening regulatory crackdown, with shares of Tencent falling the most in a decade after the internet group halted registrations on its flagship app.

Hong Kong’s Hang Seng stock benchmark tumbled more than 5 per cent on Tuesday and the Hang Seng Tech sub-index falling 8.7 per cent. Tencent’s shares shed 10 per cent, while ecommerce group Alibaba dropped 7.7 per cent and delivery platform Meituan dropped 17 per cent.

The Nasdaq Golden Dragon China index, a benchmark of Chinese tech stocks listed in New York, has dropped 15 per cent in two days — its worst fall since 2008.

In our Unhedged newsletter, Robert Armstrong looks at the growing discount investors are attributing to Chinese markets compared to their western counterparts. Sign up here.

  • Go deeper: My colleagues explain why Xi Jinping plans to crack down on China’s education sector with new restrictions that have caused the share prices of US-listed industry leaders to collapse by about 60 per cent on average.

Five more stories in the news

1. Apple profit nearly doubles as iPhone sales surge Apple’s profits almost doubled in its latest quarter to $21.7bn, as iPhone sales surged and anticipated component shortages failed to bite. Elsewhere in today’s Big Tech earnings Microsoft posted a 21 per cent jump in revenue and Alphabet saw profits almost three times higher than in the same period of last year.

2. US defence secretary questions Britain’s pivot to Asia Lloyd Austin said yesterday that Britain might be more helpful as an ally if it did not focus on Asia, highlighting US concerns that forays by European allies into the Indo-Pacific could weaken defences closer to home.

3. Hong Kong man convicted of terrorism in first security law case Tong Ying-kit, a 24-year-old former restaurant worker, has been found guilty of terrorism and inciting secession in the city’s first trial under the national security law, signalling that courts in the financial centre are prepared to take a hard line under the legislation.

4. US House convenes panel on Capitol attack Republican lawmakers critical of Donald Trump slammed their party for refusing any serious probe of the January 6 attack on the US Capitol, during an emotional hearing that featured wrenching testimony from the police who defended Congress.

5. Owner of spyware group NSO stripped of control of €1bn fund Investors in Novalpina Capital’s €1bn fund voted this month to seize control after a tense three-hour video call, people involved in the process said. The dramatic intervention leaves the ownership of the firm behind the spying software Pegasus hanging in the balance.

Tokyo Olympics round-up

‘I just don’t trust myself as much as I used to,’ a tearful Simone Biles said. ‘I don’t know if it’s age, I’m a little bit more nervous when I do gymnastics’ © Loic Venance/AFP/Getty
‘I just don’t trust myself as much as I used to,’ a tearful Simone Biles said. ‘I don’t know if it’s age, I’m a little bit more nervous when I do gymnastics’ © Loic Venance/AFP/Getty
  • Simone Biles has cited mental health issues for her shock withdrawal from the Olympic women’s gymnastics team final and cast doubt over whether she would continue her quest for a haul of gold at the Tokyo Games.

  • Naomi Osaka, the face of the Tokyo Games, is out of the Olympics tennis after a shock defeat in straight sets to Marketa Vondrousova of the Czech Republic.

  • US swimmer Lydia Jacoby won gold in the women’s 100-metre breaststroke. Returning champions Lilly King and Ryan Murphy were forced to settle for bronze in their respective events.

  • Flora Duffy won Bermuda’s first-ever gold medal in the women’s triathlon.

Add ‘Tokyo Olympics’ to myFT for all our coverage from the Games, and don’t miss our “alternative medals table”.

The days ahead

Earnings Earlier this month, Wall Street reported near-record banking revenues. Today, their European peers — Barclays and Deutsche Bank — are expected to largely follow suit. Japan’s Nissan also reports on Wednesday, along with Pfizer, Boeing and Facebook in the US.

US journalist jailed in Myanmar appears in court Danny Fenster, managing editor of Frontier Myanmar, will appear in court over charges of violating a law against dissent. Antony Blinken, US secretary of state, renewed calls for his release yesterday. (Channel Asia News)

Peru’s new president to be sworn in on bicentennial Pedro Castillo, the new leftwing president, will be sworn in on Peru’s 200th anniversary of its independence. Castillo’s rise to power marks the decline of the Fujimori dynasty, which has loomed large in Peru’s national politics for more than 30 years.

Coronavirus digest

  • US health officials have recommended that vaccinated people in areas with “substantial and high transmission” of the virus wear masks indoors in a significant climbdown from a decision made just two months ago.

  • South Korea’s economy grew at its fastest pace in a decade in the second quarter. But optimism was damped by a surge of Covid-19 infections.

  • Singapore’s health minister has ruled out another lockdown to contain the spread of the Delta virus, saying we “must find ways to live with this virus.”

Sign up for our Coronavirus Business Update newsletter and get the latest on our live blog.

What else we’re reading

How SoftBank’s dalliance with Greensill ended in disaster After coming unstuck on WeWork, the Japanese group pulled out all the stops to save its next investment. But rather than distancing itself from Greensill, when it learnt of its shaky foundations, SoftBank got even closer. Its strategy ultimately failed. 

US and China face bumpy ride as talk of decoupling intensifies Despite signs of stock market decoupling and geopolitical tensions, recent trade data between the two countries show China’s exports to the US have hit record levels over the past year, Thomas Hale writes in Trade Secrets newsletter. Sign up here.

Tiger Global ruffles Silicon Valley feathers The $70bn venture capital group has been willing to move quick, pay high prices and forgo board seats at rapidly growing start-ups. Its style, first developed in countries such as China, India and Russia, has made its biggest splash in the US, where some rivals feel threatened by the firm’s aggressive tactics.

High-risk bets spark a backlash at Binance The crypto exchange will drastically cut the risk clients can assume in one of its flagship products after uproar from regulators and consumers over high-risk derivatives that can quickly leave users nursing painful losses. Read our explainer.

Fire ‘season’ stalks California The number of acres burnt in California so far this year has outpaced what was seen at the same stage in 2020. Using the lessons of the past, Cal Fire is deploying a new fire behaviour-modelling system and weather data to help put firefighting teams into position. “California is just a year-long fire season,” says a captain in the state’s fire department. 

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