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China Giants Struggle to Lure Buyers After Epic Rout

  • Government crackdown on sector remains investors’ key concern
  • Crackdown risk is factored into shares: Fidelity International
People walk past the mascot for the Taobao e-commerce platform at the Alibaba Group Holding Ltd. headquarters in Hangzhou, China.

People walk past the mascot for the Taobao e-commerce platform at the Alibaba Group Holding Ltd. headquarters in Hangzhou, China.

Photographer: Qilai Shen/Bloomberg
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A 40% slump in shares over the past year, the winding down of a hallmark investigation and vows of support for the sector should offer a solid buy signal for China’s tech giants. But investors aren’t so sure yet.

As the Hang Seng Tech Index approaches the second anniversary of its inception next week, traders say they remain wary about plowing money into companies in the benchmark. Their angst centers on the yearyear-long government crackdown, which they see persisting even if the worst of the punitive measures may be over.