Stock rout wipes US$141bil off China’s three tech kings
US investors have a new punching bag among FAANG stocks
HONG KONG: China’s walled off tech universe isn’t offering its biggest companies much protection from the global equity rout.
The so-called BAT block of Baidu Inc, Alibaba Group Holding Ltd and Tencent Holdings Ltd have seen their combined market value fall by US$141bil from this year’s highs as a selloff in US peers spreads across the globe.
The companies were major beneficiaries of the tech equity surge that marked 2017, and are now feeling the consequences as it unravels.
Tencent’s warning on margin pressure as well as a surprise sale of stock by its biggest shareholder only added to investor jitters.
Tencent is poised to cap its first back-to-back monthly loss since 2016 in Hong Kong.
Their selloff follows that of major US tech stocks such as Facebook, Amazon and Netflix. — Bloomberg
NEW YORK: Move over, Facebook. US investors have a new punching bag among the FAANG stocks – Amazon.com, Inc.
Facebook Inc gave up the top loser spot to Amazon.com, which lost US$53bil in market value on Wednesday after Axios reported that President Donald Trump is “obsessed” with regulating the e-commerce behemoth.
The social media giant had previously underperformed the tech megacap group amid concern over the company’s handling of its users’ personal information.
Facebook, Apple, Amazon, Netflix, and Alphabet’s Google, or better known as FAANG, once assumed to be a monolith of performance, have suffered degrees of decoupling recently, including the outperformance by Netflix Inc earlier in the year.
Amazon.com fell as much as 7.4% Wednesday before paring some losses to close 4.4% lower after a Stifel Nicolaus & Co analyst said the weakness created a buying opportunity.
Facebook diverged from the group in early trading, rallying 0.5% after announcing it’s redesigning a menu of privacy settings in response to public outrage over the user data practices.
Netflix was the second-biggest loser in the FAANG group of stocks, sliding 5% on the heels of the #DeleteNetflix campaign.
“Netflix and Amazon haven’t really experienced the intense selling that Facebook did,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co.
“The ‘flu’ that Facebook got is now spreading to the others.”
The Axios report indicated that Trump may target Amazon.com’s tax treatment, and whether this materialises or not, it’s not the first time he put the retailer in his crosshairs.
On Dec 29, when he blamed the company for squeezing low prices from the US Post Office to deliver packages in his Twitter account, the stock fell 1.4%, which at a time was the biggest drop in more than two weeks. Trump has also called the company an antitrust violator in the past. “In a nutshell, the FAANG names and the Beltway continue to be on a ‘collision course’ in the eyes of the Street,” said Daniel Ives, chief strategy officer at GBH Insights LLC.
“With Facebook and regulatory worries swirling around tech names, the last thing nervous tech investors wanted to see today was news that Trump is targeting Bezos and Amazon over the coming months.”
Despite Axios alleging that Trump is beset on Jeff Bezos’ e-commerce hub, White House press secretary Sarah Huckabee Sanders stated otherwise when asked about the news at Wednesday’s briefing.
Sanders said the Trump administration isn’t considering any specific changes in regulations directed at the company.
Overall market weakness isn’t helping Amazon shares either.
The Nasdaq 100 Index lost 1.1%, on track to post the biggest monthly loss since January 2016.
The S&P 500 Index is down 0.3% to 2,605 after swinging between gains and losses earlier in the day.
The technical battle at 2,600 on S&P is “the most important thing to watch right now and if it holds, everything will bounce, including technology which has worse sentiment now,” said Ilya Feygin, senior strategist at WallachBeth Capital LLC.
“Growth equities can’t be abandoned completely and any bounce should see a nice pop.”