UBTech humanoid robot is on display during the 27th China Beijing International High-tech Expo at China National Convention Center on May 8, 2025 in Beijing, China.
China's Hong Kong-listed technology stocks slid into bear market territory on Thursday, marking a sharp reversal from last year's rally as tax worries and global risk aversion rattles investor confidence.
The Hang Seng Tech Index, which is dominated by mainland Chinese tech firms, fell more than 1%, taking the index down a little over 20% from its October peak. The index is down for a sixth straight session.
Market participants pointed to fears of a possible increase in value-added tax on internet services as a key trigger for the recent decline. The anxiety follows a VAT increase that has already been implemented on certain telecom services, raising worries that internet platforms could be next.
Speculation briefly extended to online gaming and other digital transactions, amplifying fears of fresh policy headwinds for a sector already scarred by years of regulatory tightening. Following a decline in tech stocks, officials Tuesday dismissed the speculations of a levy on the gaming industry.
"The sell-off in recent days is driven by concerns over possible VAT tax increase on internet services, online gaming and other online transactions. This follows the recent VAT increase on certain telecom services," said Qi Wang, investment strategist at UOB Kay Hian.