20 September 2019

HSI down as tech plays slump on virtual credit card ban

Hong Kong’s benchmark Hang Seng Index (HSI) continued its retreat Friday after the central bank’s ban on virtual credit cards weighed heavily on the technology, software and electronic payment sectors.

The HSI fell for the third day, giving up 216 points or 1 percent to close at 21,539 points. For the week, the index was down 1,121 points or 4.9 percent.

The Hang Seng China Enterprises Index, the main gauge for H shares, slid 0.26 percent to finish at 9,298. The Shanghai Composite Index slipped 0.73 percent to 2,004 points.

The People’s Bank of China (PBoC) has suspended the use of virtual credit cards and barcode payments by Alipay and Tencent Holdings (00700.HK), the 21st Century Business Herald reported Friday. Tencent slumped as much as 6.8 percent before ending 4.1 percent lower. It was the second worst performing blue chip of the day. The stock has retreated 12.7 percent since reaching its peak last Friday.

The PBoC issued the prohibition amid concerns about data security and consumer protection. Meanwhile, China CITIC Bank Corp. (00998.HK, 601998.CN), which has announced plans to launch virtual credit cards with Alipay and Tencent, said it has yet to receive an order from the central bank, according to the report. The counter fell nearly 7 percent before its trading was suspended Friday.

The decision also prompted investors to cash out of the payment sector. China Innovationpay Group (08083.HK) took a freefall and ended the day 14.6 percent lower, while Econtext Asia (01390.HK) gave up nearly 8 percent. Software player Kingsoft (03888.HK) closed 5.4 percent lower. 

New World Development (00017.HK) tumbled 14 percent, becoming the session’s worst-performing blue chip, after announcing plans to issue as many as 2.26 billion rights shares at HK$6.20 each, which is a 36 percent discount to its previous closing price. The issue involves one right share for every three shares.

The group also offered HK$18.6 billion (US$2.4 billion) to privatize New World China Land (00917.HK). Shareholders of the China property arm will get HK$6.80 a share, a 32 percent premium to Thursday’s closing price. New World China jumped almost 29 percent for the day.

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