Chinese technology stocks plummeted in Hong Kong on Tuesday, March 15, after a surge in COVID-19 cases. U.S.-listed Chinese firms in New York also took a hit following bad news from China.

The Hang Seng Tech Index in Hong Kong closed down at 8.1%.

Nikkei Asia reported that the main Hang Seng Index dropped at 5.7%, a six-year record low. The Shanghai Stock Exchange, SSE Composite Index suffered a 5% drop on the mainland China market.

China’s tech giants Alibaba, JD.com, Nio, Baidu, Gaotu Techedu, and Bilibili dropped between 4.5% and 6% in premarket U.S. trading.

On Tuesday, China reported a surge in daily COVID-19 cases, causing concerns that strong measures applied by Chinese authorities could hurt business activities.

Last week, several factories of international firms were forced to stop production when COVID-19 broke out in China.

Chinese provinces and cities often tighten control of their normal activities following Beijing’s zero-covid policy by locking down and isolating the affected areas to stop the virus from spreading to nearby places.

Toru Nishihama, the chief economist at Dai-ichi Life Research Institute, told Nikkei Asia, “as Chinese authorities continue their ‘zero-corona policy,’ urban blockades could hinder economic recovery from the pandemic.”

According to Nikkei Asia, tech shares falling sharply on Monday were also partially because China disclosed a new bill limiting children’s Internet use time. Last year, China set the same restrictions for games, video streaming, and social networking apps.

The stock downtrend started last Thursday after the U.S. Securities and Exchange Commission (SEC) listed five Chinese firms on a provisional list that could lead to their delisting from U.S. exchanges over the next three years.

According to Reuters, the SEC’s decision is causing more fund managers to sell their holdings in U.S.-listed Chinese firms, lowering the chance of new listings in the near future.

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