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Hong Kong stocks drop after China fines Alibaba, Tencent-backed China Literature for antitrust breaches

  • Hang Seng Index fell 0.4 per cent on Monday, but Shanghai Composite rises 0.7 per cent
  • Big tech has risen too much, and with the antitrust law coming in China, investors should lock in gains, analyst says

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Martin Choi

Hong Kong stocks fell on Monday after China’s market regulator fined Alibaba Group Holding and Tencent Holdings-backed China Literature for breach of antitrust regulations.

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The Hang Seng Index followed a decline of 1.2 per cent last week with a 0.4 per cent decline to 26,389.52 at the close. The Shanghai Composite Index, however, rose 0.7 per cent, after its biggest weekly decline last week in more than two months.

The State Administration for Market Regulation said in a statement at noon that it would impose fines of 500,000 yuan (US$76,457) each on Alibaba and China Literature, as well as Shenzhen Hive Box Technology, for not reporting deals properly for antitrust reviews.

Alibaba, the owner of this newspaper, fell 2.6 per cent to HK$251.60, while Tencent fell 2.9 per cent to HK$571. China Literature fell 4.1 per cent to HK$55.85.

The state regulator’s statement contributed to a drop in other large technology stocks as well and dampened market sentiment, said Louis Tse Ming-kwong, managing director of Wealthy Securities.

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“It’s a wake-up call for these big [technology companies], because of the way they are doing things and trying to monopolise the market they are in. All these stocks have gone up too much in 2020. With the antitrust law coming in China, investors should lock in their gains, if any.”

Food delivery giant Meituan fell 3.8 per cent to HK$282.60. It became a constituent of the Index last week, on December 7. JD also fell, declining by 1.6 per cent to HK$315.20.
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