Hong Kongs Hang Seng index closes more than 4 down as China tech and education shares plunge

SINGAPORE â€" Shares in Hong Kong dropped sharply by the close on Monday, wiping out the Hang Seng index's gains for 2021 once again as Chinese tech and education stocks plunged on regulatory pressure. Meanwhile, a summit between China and the United States got off to an acrimonious start, weighing on investor sentiment.

The broader Asia-Pacific markets were largely lower, with mainland Chinese stocks also falling.

The Hang Seng index in Hong Kong fell 4.13% to close at 26,192.32, leading losses in the region.

Hong Kong-listed shares of Chinese tech giant Tencent slipped 7.72% on Monday while Alibaba also dropped 6.38% and Meituan fell 13.76%. The Hang Seng Tech index plunged 6.57% on the day to 6,790.96.

Those losses came after China's antitrust regulator ordered Tencent to give up its exclusive music licensing rights and slapped a fine on it for anti-competitive behavior, marking yet another development in Beijing's ongoing crackdown on its domestic internet titans.

Shares of private education firms listed in Hong Kong also tumbled as Chinese authorities also stepped up restrictions on the sector. New Oriental Education & Technology Group, Koolearn Technology and China Beststudy Education Group all saw their shares plummeting more than 30% each.

Chinese stocks fall as tensions with U.S. rise

Mainland Chinese stocks also saw sizable declines on Monday, with the Shanghai composite down 2.34% to 3,467.44 while the Shenzhen component fell 2.646% to 14,630.85.

Tensions between Washington and Beijing may have weighed on investor sentiment, as a high-level meeting between the two economic powerhouses got off to an acrimonious start.

China's vice foreign minister said during Monday talks with the U.S. deputy secretary of state that the two countries' relationship is "now in a stalemate and faces serious difficulties," according to an English-language press release from China's Ministry of Foreign Affairs.

In other markets, South Korea's Kospi closed 0.91% lower at 3,224.95. In Australia, the S&P/ASX 200 ended the trading day flat at 7,394.30.

Returning to trade following holidays on Thursday and Friday, Japanese stocks bucked the overall trend regionally. The Nikkei 225 jumped 1.04% on the day to 27,833.29 while the Topix index advanced 1.11% to close at 1,925.62.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 2.15%.

Singapore's manufacturing output declined 3% in June on a seasonally adjusted, month-on-month basis, according to official data released Monday.

Covid restrictions in Asia

Investors likely continued to monitor the Covid situation in Asia as it weighs on sentiment.

In South Korea, the second highest level of virus restrictions will be applied to non-capital areas starting Tuesday, local agency Yonhap reported. Elsewhere, Tokyo's daily coronavirus tally has exceeded 1,000 for six days in a row, according to Kyodo News.

Indonesia on Sunday also extended its Covid restrictions by a week, according to Reuters. The country has been among multiple Southeast Asian nations that have been grappling with a resurgence in infections.

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On Friday, the Dow Jones Industrial Averaged closed above 35,000 for the first time ever while the S&P 500 jumped 1.01% to 4,411.79 and the Nasdaq Composite gained 1.04% to 14,836.99. Friday's moves upward saw all three major indexes stateside at new closing highs.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 92.864 following a recent bounce from below 92.8.

The Japanese yen traded at 110.18 per dollar, weaker than levels below 110 seen against the greenback last week. The Australian dollar changed hands at $0.7335, above levels below $0.732 seen last week.

Oil prices were lower in the afternoon of Asia trading hours, with international benchmark Brent crude futures down 1.67% to $72.86 per barrel. U.S. crude futures slipped 1.89% to $70.71 per barrel.

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