Shares of mainland-based listed firms slide
Shares of Chinese technology companies listed overseas continued to plunge on Wednesday as the sell-off in the mainland stock markets spread overseas.
Shares of Internet giant Tencent Holdings fell by 6.84 percent in Hong Kong trading on Wednesday. Legend Holdings, the parent company of the world's largest PC maker Lenovo Group that debuted on the Hong Kong bourse on June 29, also saw its shares drop by 10.47 percent.
Many U.S.-listed Chinese tech companies registered declines in their share prices on Tuesday, with e-commerce giant Alibaba Group falling by nearly 5 percent during intraday trading and group-buying website Wowo Ltd closing at more than 20 percent lower. The trend continued on Wednesday with Alibaba and Wowo's share prices dropping 1.46 percent and 8.75 percent respectively as of 11 pm Beijing time.
The stock market slump has also wiped out personal wealth of China's tech tycoons. Jack Ma Yun's net worth shrank by $123.3 million on Tuesday following the drop in the shares of Alibaba, and Tencent's Pony Ma Huateng saw his net wealth shrink by $213.9 million, according to the Bloomberg Billionaires Index.
The tumble in China's A-share markets, especially the plunge in the NASDAQ-style ChiNext board, has weighed down overseas investor sentiment in mainland-based tech companies, analysts said.
"The panic in the mainland stock markets is now spreading, and some overseas investors have taken the advantage to short sell shares of Chinese companies listed in the US," Zhang Xiang, an analyst with ChinaVenture Investment Consulting Ltd, told the Global Times Wednesday.
But compared with previous short-selling activities triggered by business or accounting fraud, most U.S.-listed Chinese companies that saw their share prices plunge are in normal operation, and their valuation is also at a reasonable level, according to Zhang.
Chinese companies in the ChiNext board were traded at 68 times their earnings on average in the first half of 2015, higher than their US-listed counterparts that traded at 16 times during the same period, data from Zero2IPO Group showed.
The bull run in the A-share market, the high valuation of tech firms and China's support to mass entrepreneurship and innovation have encouraged Chinese companies listed in the US to return home, with more than 20 such firms revealing plans in the first half to go private.
US-listed companies such as Internet security firm Qihoo 360, dating website Jiayuan.com International and social networking site Renren Inc declined to comment on the process of their privatization plans when reached by the Global Times.
"The recent volatility in the mainland stock market, which has led to a nearly 40 percent drop in the ChiNext index since June, will make company executives rethink their privatization plans," Wang Yaqian, an analyst with Internet research agency iResearch, told the Global Times Wednesday.
Companies that have already announced privatization plans will have to carefully measure the benefits and risks of a potential listing in the mainland stock market, Wang said.
