(Bloomberg) — China’s technology companies took a beating after more firms reported earnings, as price wars and geopolitical tensions cloud the growth outlook for the sector.
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NetEase Inc. slumped as much as 11% after a profit miss, while Alibaba Group Holding Ltd. fell as much as 4.8%, as analysts remained cautious about its sales growth prospect. The Hang Seng Tech Index fell as much as 2.6%, taking its decline from a January peak to 16%.
While the worst of the regulatory crackdowns that bruised the tech sector over the past few years may be over, there is growing concern that burgeoning price wars and fresh rounds of cash burn will further hurt profits as the strength of the country’s economic recovery remains in question.
Meanwhile, US Secretary of State Antony Blinken said Thursday that China’s government probably approved of Chinese firms providing Russia non-lethal, “dual-use” support for its war in Ukraine, adding to growing US-China tensions.
READ: China Tech Faces Uphill Battle to Revive Rally: Earnings Watch
“China Internet is becoming a more beta-flow driven sector, more top down driven by geopolitics, global positioning, and traded as a China proxy rather than too much of a bottom up,” said Winnie Wu, chief China equity strategist at Bank of America.
It remains to be seen if other tech firms will be able to stand up to the test as they release their earnings in the coming week. Li Auto Inc. is due to report next Monday, while Weibo Corp., Nio Inc. and Bilibili Inc. are also scheduled to report next week.
“While earnings are not all bad, there are still plenty of risks — the amount of clarity for tech firms listed is still sparse given the mid to long-term threat to fundamentals with price wars,” said Zhang Hao, fund manager at Granford (Beijing) Capital Management Co.
- ដោយមានជំនួយពី Charlotte Yang ។
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Source: https://finance.yahoo.com/news/alibaba-netease-slump-earnings-fail-062018564.html