More and more Asian companies have announced share buybacks in recent weeks. Chinese Internet giant Alibaba has announced that it will increase its share buyback program from $15 billion to $25 billion.
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Shares of U.S.-listed Chinese companies fell sharply on Monday after Beijing tightened President Xi Jinping’s rule, dampening investor sentiment for non-state companies.
Invesco Golden Dragon China ETF, which tracks the Nasdaq Goldman Dragon China Index, fell 14.5% to its lowest level since 2009. The ETF fell more than 20% at one point on Monday. The index includes 65 companies whose common stock is publicly traded in the US and whose majority business is conducted in the People’s Republic of China.
A technology giant Alibaba it was down more than 12% after earlier falling over 19% to a new 52-week low. Tencent Music Entertainmentt fell 5%, following an earlier decline of 18%. Another technical name Pinduoduo ended the day 24.6% lower after earlier plunging a whopping 34% on Monday.
The moves came after Xi paved the way for an unprecedented third term as leader and packed the Politburo Standing Committee, a key circle of power in the ruling Chinese Communist Party, with loyalists.
Under Xi’s leadership, China has implemented a series of policies that have tightened regulation of the technology sector in areas from data protection to managing how algorithms can be used.
Meanwhile, Xi has stuck to a strict “zero Covid” policy that has seen cities, including mega financial hub Shanghai, locked down this year, even as most of the world has opened its economies.
“Stocks based in the world’s second-largest economy are ‘underinvested’ again,” Bernstein’s Mark Schilsky said in a note on Monday.
Hong Kong’s Hang Seng Index fell 6.36% to its lowest level since April 2009. The Shanghai Composite and the Shenzhen Composite in mainland China lost about 2%.
Wall Street’s chief strategist, JPMorgan’s Marko Kolanovic, believes the sell-off in Chinese stocks is disconnected from fundamentals, presenting a buying opportunity.
— CNBC Arjun Kharpal contributed reporting.