China's tech and chip sectors under fresh sell pressure

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On Tuesday, China's technology and chip sectors came under fresh sell pressure after state media attacked the country's largest social media and video game firm Tencent Holdings Ltd, and regulators said they are investigating chip distributors in the auto industry.

The broadside comes days after the Federal Securities and Investment Board (FDIC) put out a report that sought to soothe investor fears over the pace and breadth of market reform.

The following are quotes from analysts, strategists and market watchers.

ALEX WONG, DIRECTOR, AMPLE FINANCE GROUP, HONG KONG We don't like the regulatory news flow from the recent side. We are reducing exposure in those sectors with a higher risk of being regulated. Hong Kong is all about exposure, but we are not reducing a lot of 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.

We need to see whether this will develop into something terrible. I think people have been used to policy risk in China, so they are expecting some kind of loosening if things turn south? So I think that is why the market actually is not too bad right now, but I think risk is actually quite high this time because news flows continue to come out. We have not seen the end of this wave of regulation so people will stay out from those sectors which have higher risk.

ETHER YIN, A PARTNER AT TRIVIUM, A BEIJING-BASED CONSULTANCY, showed how investors are pissed these days. They don't believe anything is off limit and will react, sometimes over react, to anything posted on state media that fit the Tech crackdown narrative.

Government will not and can not get rid of gaming industry. The addictive line continues to keep children from getting addicted to games. That's been the policy of the land since 2018. The industry is already governed by heavy regulations like new quota of big games and restrictions on amount of time that minors can play games. Those restrictions will stay, but not much room to grow tighter.