A slew of Chinese tech companies slid Tuesday after unveiling plans by key shareholders to reduce holdings, chilling sentiment ahead of the earnings season.
(Bloomberg) — A slew of Chinese tech companies slid Tuesday after unveiling plans by key shareholders to reduce holdings, chilling sentiment ahead of the earnings season.
About 40 companies listed on the mainland have announced overnight that shareholders or senior management plan to offload their stakes, according to a Bloomberg calculation. Many of the stocks are related to artificial intelligence, signaling that the nation’s tech frenzy may have lost momentum.
Advanced Micro-Fabrication Equipment Inc. plunged as much as 7.3% in Shanghai as its biggest shareholder announced a reduction in holdings. SenseTime Group Inc. fell 3.9% in Hong Kong after exchange filing showed Alibaba Group Holding Ltd. recently sold 40 million shares. Beijing Kingsoft Office Software Inc. also traded lower as shareholders planned to cut stakes.
“If patterns in recent years hold, then insider or management share sales — if and when materialized — may suggest the peaking of the underlying thematic proxies,” said Wendy Liu, strategist at JPMorgan Chase & Co., referring to the AI-related stock rally.
The insider selling of Chinese companies adds to concerns that the valuation of some tech stocks have gotten ahead of the market, as investors await first-quarter earnings.
Last week, European internet powerhouse Prosus NV registered more than $4 billion of stock in Tencent Holdings Ltd. for potential sale in Hong Kong, while news emerged that SoftBank Group Corp. is preparing to hasten its exit from Alibaba.
–With assistance from Mengchen Lu and Ken Wang.
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