Asian stocks slide on rising US yields

Chinese regulator imposes maximum fine on Tencent and Alibaba for failing to report deals

Asia-Pacific stocks experienced a mixed day of trading on Wednesday, as markets reacted to the recent rise in US Treasury yields and the latest government crackdown on Chinese technology companies. 

US Treasury yields

With the Federal Reserve widely expected to raise interest rates from their current record lows in the near future, US Treasury yields have risen at their fastest New Year pace for 20 years. 

The 10-year US Treasury yield rose to a high of 1.71% on Tuesday, while the 30-year US Treasury yield briefly rose above 2.1% for the first time since October. 

The likelihood of higher rates has prompted a rotation out of fast-growing technology stocks. Indeed, the tech-heavy Nasdaq index fell by as much as 2% in light of Tuesday’s bond market activity. 

Chinese markets

This trend was replicated in Asia-Pacific markets, with the Shanghai Composite Index falling by 1% and Hong Kong’s Hang Seng Index closing down by 1.6%. 

Tencent Holdings closed down by 4.3% to HKD 430.60, after it announced the sale of $3bn of shares in the Singaporean gaming firm Sea Ltd. The company’s stock has fallen by over 27% in the past 12 months, weighed down by a series of fines and interventions by Chinese regulators. 

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On Tuesday, China’s State Administration for Market Regulation (SAMR) fined units of Tencent, Alibaba Group and Bilibili for failing to report a dozen deals properly. The regulator imposed the maximum fine of CNY 500,000 ($78,678) per deal. 

Alibaba closed 2% lower at HKD 114.50, having traded at HKD 230.00 a year before.

Wider Asia-Pacific stocks

Australia’s ASX All Ordinaries Index slipped by 0.3%, while South Korea’s KOSPI finished 1.1% lower. Korean internet firm Kakeo suffered a 5.3% drop, while technology giant  Samsung Electronics fell by 1.6%. 

The leading indices of India and Japan bucked this trend, finishing the day 0.1% and 0.6% higher respectively.

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