Technology
Just as the Nasdaq Composite Index surges to the cusp of the record high set during the dot-com-era, the excitement about China’s Internet boom is fading, reports Bloomberg News.
Half of the 14 Chinese dot-coms that debuted in the U.S. last year are now trading below their initial sale prices. Even Alibaba Group Holding Ltd., one of those still up in price, has dropped 28 percent from its record high in November.
On average, the 14 Chinese shares are down 3.1 percent this year, compared with a 6.1 percent advance in the Nasdaq. Investor confidence, so high when Alibaba brought its record $25 billion initial public offering to market last September, is being undermined now by a wave of poor earnings at Chinese technology companies.
Those that went public last year including Weibo Corp., the microblogging service, and mobile dating app developer Momo Inc. have failed to deliver the revenue investors were expecting.
“The market is nervous,” Michael Wang, a strategist at Amiya Capital LLP in London, said by e-mail March 18. “Whether investors come back is questionable.”
The earnings disappointment -- and stocks’ slump -- is clearly a reflection in part of the slowdown in the world’s second-biggest economy, but a look at broader Chinese equity gauges shows that can’t be the only explanation.
The benchmark index in Shanghai is up 13 percent this year through Friday, part of a 78 percent rally since mid-2014, and Bloomberg’s gauge of Chinese shares traded in New York has climbed 5.1 percent.
Mainland investors may be shifting their funds from U.S. listed companies to the domestic market after the benchmark Shanghai Composite Index entered a bull market, according to Jun Zhang, head of China research at Rosenblatt Securities Inc.
The domestic benchmark touched a five-year high March 18, on speculation the government may take steps to boost the economy. The most-actively traded Chinese companies in the U.S. only increased 1.4 percent during the same period.
