China Tech Giants Listed in Hong Kong Plunge Again

Chinese technology giants are looking more mortal after another grim day at the Hong Kong Stock Exchange, where the tech index fell by nearly 4% on Thursday.

Tencent plunged by more than 6% after reporting on Wednesday that its quarterly profit had halved from a year ago. Indeed, it reported no revenue growth in the first quarter, which was its worst performance since it went public in 2004.

Alibaba also dropped by 7.39%, while its e-commerce rival JD.com was down 3.7% and Meituan slipped by nearly 3.8%.

Hong Kong Stock Exchange has seen a wave of listings deferred this year, because of the economic slowdown. The Hang Seng index dipped 2.54%, or 523.68 points.

But the tech sector is still reeling from a year-long government crackdown and a dramatic slowdown caused by Beijing’s strict zero-Covid policy in cities such as Shanghai, which is only just emerging from a lockdown lasting nearly seven weeks.

Vice-Premier Liu He, one of the country’s top economic advisers, had soothing words to say when he met with tech executives on Tuesday, but they meant little amid the bearish sentiment which has gripped both domestic and international markets.

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Tencent’s Market Value Halved

Tencent, which operates the WeChat messaging platform and is the world’s largest video game company, said ad sales slumped 18% in the first quarter that ended on March 31, following a 13% drop in the October-December period.

Covid-19 lockdowns in China have battered advertiser sentiment, while Tencent’s ad business has also taken a knock from competition from rivals, including TikTok owner ByteDance.

The Shenzhen-based company has lost more than half its market value since it peaked in February 2021 following Beijing’s regulatory crackdown to rein in the influence of large internet firms, though it remains China’s most valuable company.

In a call with analysts, Tencent president Martin Lau said that Beijing has begun to voice support for tech companies in recent weeks as Covid outbreaks have sapped the country’s economic growth momentum. He cited the meeting on Tuesday, where Liu He assured tech firms of the authorities’ support.

“So you can see that from the senior-most level, there is a pretty clear supportive signal released,” he said, adding it would take time before that makes a real impact on the company’s business.

• Jim Pollard with Reuters.