(Bloomberg) -- The worldwide slump in technology stocks deepened on Tuesday, with fresh signs of regulatory scrutiny in China adding to investor angst over inflation and stretched valuations.
The Hang Seng Tech Index sank as much as 4.5%, extending its tumble from a February high to about 30%. Meituan paced declines after the Chinese e-commerce giant’s business practices were criticized by an influential consumer advocacy group, just days after the company’s CEO shared and then deleted a poem on social media that some interpreted as a veiled criticism of Beijing.
Losses in Taiwan Semiconductor Manufacturing Co. helped send MSCI Inc.’s gauge of Asian tech stocks to its biggest drop since Feb. 26, while futures on the Nasdaq 100 extended declines after a 2.6% drop on Monday.
Chinese tech giants have borne the brunt of the sector’s retreat this month, after regulators expanded an antitrust crackdown and announced steps to rein in the companies’ fast-growing finance units.
The stocks had benefited from a flood of money into the global tech sector last year, when the pandemic stoked demand for online services and low interest rates encouraged investors to overlook frothy equity prices. Now concern is mounting that commodity-fueled inflation will prompt central banks to tighten monetary policy, denting the appeal of stocks whose valuations often hinge on earnings prospects far into the future. With the Nasdaq 100 still trading about 5% from its all-time high last month, some market participants see a good window to take profits.
Investors “continue to place their focus on the inflation narrative, with rising commodities prices and chip shortages in play,” said Yeap Jun Rong, a market strategist at IG Asia Pte. “Concerns of higher inflation may weigh on growth stocks.”