Chinese stocks sink, tech sector battered by regulatory fears

China stocks closed lower, dragged down by IT services providers and the aerospace industry.

The Shanghai Composite Index lost 0.53 percent to 3,342.20 points, while the smaller Shenzhen Component Index plunged 1.95 percent to end at 13,720.17 points.

Tech shares tracked yesterday’s weakness, weighed down by concerns about tighter regulation over the industry.

The tech-heavy ChiNext Composite Index plummeted 3.31 percent to 2,681.52 points. The STAR 50 Index, which tracks the 50 biggest and most representative companies listed on the tech-heavy STAR Market for more than six months, sank 3.22 percent.

“While regulatory concerns could be the biggest risk factor going into 2021 for Internet companies, the Chinese government is not aiming to curb their development as the platform economy brings innovation and digitalization to the overall economy,”Daiwa analysts wrote in a report.

Most industry sectors lost, while IT service providers and the aerospace industry suffered the biggest losses of the day, plummeting 2.6 percent and 2.8 percent, respectively.

Bucking the trend, the liquor and coal mining industries posted gains.

Turnover on the two major bourses shrank to 869.6 billion yuan (US$131.53 billion). The mainland markets saw a net outflow of 930 million yuan in overseas capital via Stock Connect schemes linking Shanghai and Shenzhen with Hong Kong.