China’s gauge of tech equities fell to the lowest since its inception more than three years ago as investors’ confidence in the sector wanes amid concerns higher US rates will hurt demand for growth stocks everywhere.
The Star 50 Index is down as much 1.9% Monday to 845.7 points and set for the six consecutive month of decline, the longest on record. Cambricon Technologies Corp. plunged as much as 17%, leading the decliners on the gauge. Chipmakers ASR Microelectronics Co. and Loongson Technology Corp. each dropped at least 5%.
Higher US rates are hurting tech stocks everywhere as investors worry about global funding liquidity and the impact on the world’s biggest economy. China’s tech shipments may also get affected, with sluggish exports seen among companies in the Star 50 Index.
“Liquidity conditions are a paramount factor for tech, and on top of that the outlook for renewables exports has become less rosy,” said Li Xuetong, a fund manager at Shenzhen Enjoy Equity Investment Fund Management Co. “Funding-dependent pharma stocks have trouble keeping up current valuations, while the Huawei lift to chip shares is not enough to turn around broader sentiment on the Star Board.”
