Hong Kong stocks fell on Friday morning as concerns about Chinese companies being kicked off American stock exchanges delivered a punch to technology giants, compounded by Didi Global's move to delist from New York.

The Hang Seng Index retreated 0.7 per cent to 23,612.43 at noon local time, reversing two days of gains and putting it on track for a weekly loss of 0.9 per cent. The setback stemmed from the Hang Seng Tech Index sliding 2.3 per cent to close to a record low. China's Shanghai Composite Index rose 0.6 per cent.

Alibaba, the owner of this newspaper, sank 4.6 per cent to HK$117, deepening a rout as it continues to trade at a record low. Food delivery platform operator Meituan declined 4.5 per cent, while online gaming giant Tencent lost 2.9 per cent.

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"Declines in the Hang Seng Index have been led by Chinese tech stocks following weak overnight returns. More broadly, US markets have been weak on Omicron concerns and the Fed chair's hawkish comments," said Stephanie Leung, head and deputy chief investment officer at wealth management firm StashAway HK.

Tech giants suffered losses as the Securities and Exchange Commission (SEC) moved closer to a new law on Thursday that could see Chinese companies booted off American bourses. The new rules would aim to ensure foreign firms, in particular Chinese companies, comply with audit requirements.

Since a February peak, successive sell-offs in the Chinese tech sector have wiped off about US$1.5 trillion of market value in the Hang Seng Tech Index. The Nasdaq Golden Dragon China Index, which tracks US-listed Chinese stocks, sank to its lowest in almost 19 months.

Soon after the SEC's move, Didi Global announced on Weibo that it had begun preparations to delist in the US. The ride-hailing giant said on Friday it would prepare for a Hong Kong initial public offering. Its shares declined 0.1 per cent to US$7.80 on Thursday in New York.

Separately, the overstretched Chinese property sector continued to reel as another developer edged towards the brink of disaster on Thursday. China Aoyuan Group said it had been unable to meet debt repayments of US$651 million following recent credit rating downgrades. Its shares slumped 16.8 per cent to HK$1.68.

In mainland China, Tongling Jieya Biologic Technology, a cleaning wipes producer, jumped 51 per cent to 86.68 yuan on its debut.

Major markets in Asia gained, rising 0.8 per cent in South Korea and 0.3 per cent each in Australia and Japan.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

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