SHANGHAI - China's electronics and chip sectors suffered fresh selling pressure on Tuesday after state media attacked the nation's largest social media and video game firm, Tencent Holdings Ltd. regulators said they were launching an investigation into chip distributors in the auto industry.
The broadside comes days after securities regulator and the state media sought to soothe investor fears over the pace and breadth of market reform.
The following are quote from market watchers, analysts, strategists and market watchers.
What do you think about the regulatory news flow? We are reducing our exposure in those sectors which have a higher risk of being regulated. But Hong Kong is not reducing exposure in Hong Kong. Actually we are shifting our exposure to some sectors like manufacturing or electric vehicles, or some consumption brands because they would be less policy-sensitive.
Also, we need to see whether this will evolve into something horrible. I think there are people who are on the edge of policy risk in China so they expect a bit of easing if things turn south. I think that is why the market actually is not too bad right now, but I think the risk is actually quite high this time because of news flow continues to come out. We have not seen the end of this wave of regulatory regulations so people will be keeping out of those sectors with higher risk.
Investors were getting so jumpy these days. They don't believe anything is off limit and will react to anything on state media that fits the tech crackdown narrative, sometimes over react.
The government will not and cannot be rid of gaming industry. The addictive line continues to keep the kids from getting addicted to games. And that's the policy of the land since 2018, since 2018. The industry is already subject to heavy regulations, like the limitation of minor games and annual quota of new games. Those restrictions are going to stay but in some areas there is not much room for tighter regulations.