(Bloomberg) — Chinese shares in the crosshairs of Beijing’s regulatory crackdown extended their sharp selloff into a third day Tuesday.
Technology and education shares retreated once again while property stocks also fell. Tencent Holdings Ltd. slumped over 6%, after the company’s music arm gave up exclusive streaming rights and was hit with fines. Meituan fell as much as 15%, its biggest decline ever, after tumbling 14% on Monday.
Read More: China’s crackdown rocks investors, with losses in Chinese tech and education stocks now exceeding $1 trillion since February.
The Hang Seng Tech Index dropped as much as 5% and has now fallen into negative territory exactly one year after it was first launched. The broader Hang Seng Index also retreated.
“The key concern now is whether regulators will do more and expand the crackdown to other sectors,” said Daniel So, strategist at CMB International Securities Ltd. “The regulatory concerns will be the key overhang to the market for the second half.”
So added that it was too soon in his opinion for investors to “bottom fish.”
A Chinese regulatory crackdown on some of the economy’s most vibrant sectors, including education and technology, has rocked investors this month. Stocks tumbled in “panic selling” on Monday after regulators on Saturday published reforms that will fundamentally alter the business model of private firms teaching the school curriculum.
Hong Kong’s major retail brokers lowered margin financing for battered Chinese education stocks as investors suffered steep losses.
Beijing is attempting to rein in private enterprises that it blames for exacerbating inequality, increasing financial risk and challenging the government’s authority.
Meanwhile, sentiment toward property stocks was hit as China Evergrande Group surprisingly decided against declaring a special dividend after investors were spooked by news that banks and ratings companies are growing wary of the debt-laden developer. Its shares fell as much as 13.6%.
A Bloomberg Intelligence index of Chinese property developers slid as much as 2.4% on Tuesday after slumping almost 5% on Monday as investors feared regulations on the sector will tighten further.
(Adds Hang Seng Tech performance to third paragraph and updates prices)
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