Chinese technology stocks on Tuesday experienced a notable decline as a series of setbacks impacted market sentiment, driven by Xiaomi Corp’s share sale and adverse news from key companies.
The Hang Seng Tech Index (HSTECH) fell by up to 3.8%, marking a downturn of about 9% from its peak on March 18. Shares of Xiaomi were hit, dropping more than 6% after the company raised $5.5 billion through an expanded share placement.
Xiaomi announced that it had secured $5.5 billion through an upsized share sale as part of its aggressive plans to venture into electric vehicle manufacturing. The company disclosed that it sold 800 million shares at a price of HK$53.25 each, as detailed in its statement to the Hong Kong Stock Exchange.
Recent trading sessions have seen increased volatility as investors closely monitor corporate developments following a previously strong rally. Among the declines, Alibaba Group Holding Ltd saw its shares fall over 3% amid warnings from its chairman about a potential bubble in global data center construction.
Additionally, Sunny Optical Technology Group’s shares plummeted almost 9% following its cautionary note on market restructuring due to overcapacity.
According to Steven Leung, an executive director at UOB Kay Hian Hong Kong Ltd, the impact of Xiaomi’s upsized share placement has contributed to market concerns, particularly about its potential effect on liquidity. This month, Xiaomi, along with a similar fundraising endeavor by BYD Co., has collectively raised approximately $11 billion.
