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China Tech Selloff Deepens as Tencent Sale Spooks Traders

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(Bloomberg) — China’s tech stocks fell once again on Wednesday as firms backed by Tencent Holdings Ltd. came under pressure after it pared investment in the cohort for a second time in two weeks.

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The Hang Seng Tech Index fell 4.6% — the most since July — in a third straight day of declines, with overnight weakness in U.S. peers also weighing. The gauge closed at lowest since its inception in mid-2020 with Tencent investees Bilibili Inc., Meituan and JD.com Inc. among the biggest losers.

The Chinese tech giant cut its stake in Singapore’s Sea Ltd. on Tuesday — selling $3 billion of shares — sparking concerns of similar actions at other firms amid Beijing’s regulatory crackdown. U.S. tech shares also fell overnight as traders trimmed bets on stocks with extended valuations amid a rise in Treasury yields.

Drubbing in Tech Marks Biggest New-Year Stock Rotation Since ’95

Tencent’s move is aiding expectations that the firm and its rivals may pare holdings as Beijing punishes the country’s tech giants for anti-competitive behavior, including maintaining closed ecosystems that favor certain firms at the expense of others. Last month the company said it plans to distribute more than $16 billion of JD.com’s shares as a one-time dividend.

“China’s anti-monopoly rules and regulators’ concerns about data privacy as well as web security may lead to more divestment in the country’s internet space in the coming months,” Bloomberg Intelligence analyst Cecilia Chan wrote in a note.

Tencent controlled a portfolio of investments worth $185 billion at the end of September, Bloomberg Intelligence estimates.

Online Pressure

Among Tencent-backed companies, live-streaming platform operator Bilibili and food delivery giant Meituan dropped 11% each. China’s No. 2 online retailer JD.com fell 7.2% and Tencent closed 4.3% lower.

“China is at the stage of implementing many tightened policies and rules that the government announced last year on the technology sector,” said Linus Yip, a strategist at First Shanghai Securities. “The range-bound trading and heightened volatility may last through the first quarter.”

The recent spike in U.S. Treasury yields has also weighed on tech stocks across Asia. The MSCI AC Asia Pacific Communication Services Index dropped as much as 2.3%. SoftBank Group Corp.-backed search engine operator Z Holdings Corp. fell 3.6% while chipmaker Samsung Electronics Co. declined 1.7%.

The Tokyo Stock Exchange Mothers gauge, which tracks shares of small- and medium-sized software-technology companies, dropped 5% to the lowest since May 2020.

Even Alibaba Group Holding Ltd., which initially rose nearly 2% on news that a Charlie Munger-associated company nearly doubled its holding in the e-commerce giant in the last quarter of 2021, closed 2.1% lower.

The declines in tech and other stocks in Hong Kong widened in the last hour of trading after the city tightened rules to curb the spread of the omicron variant. The Hang Seng Index closed 1.6% lower to mark its biggest drop in more than two weeks

Hong Kong Scraps Flights, Shuts Bars and Gyms as Omicron Emerges

(Updates share moves throughout.)

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Teladoc Tumbled 38% After Big First-Quarter Loss. Is It Just a Pandemic Play?

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After pandemic drop, Canada’s detention of immigrants rises again By Reuters

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© Reuters. FILE PHOTO: Two closed Canadian border checkpoints are seen after it was announced that the border would close to “non-essential traffic” to combat the spread of novel coronavirus disease (COVID-19) at the U.S.-Canada border crossing at the Thousand Isla

By Anna Mehler Paperny

TORONTO (Reuters) – Canada is locking up more people in immigration detention without charge after the numbers fell during the pandemic, government data obtained by Reuters shows.

Authorities cite an overall rise in foreign travelers amid easing restrictions but lawyers say their detained clients came to Canada years ago.

Canada held 206 people in immigration detention as of March 1, 2022 – a 28% increase compared with March 1 of the previous year. Immigration detainees have not been charged with crimes in Canada and 68% of detainees as of March 1 were locked up because Canada Border Services Agency (CBSA) fears they are “unlikely to appear” at an immigration hearing, according to the data.

The rise puts Canada at odds with Amnesty International and other human rights groups that have urged Ottawa to end its use of indefinite immigration detention, noting CBSA has used factors such as a person’s mental illness as reason to detain them.

A CBSA spokesperson told Reuters that “when the number of entries (to Canada) goes up, an increase in detention is to be expected.” CBSA has said in the past it uses detention as a last resort.

A lawyer told Reuters her detained clients have been in Canada for years.

In the United Kingdom, too, immigration detention levels rose last year after dropping earlier in the pandemic, according to government statistics. Unlike Canada, the United States and Australia, European Union member states have limits on immigration detention and those limits cannot exceed six months.

The rise in detentions puts people at risk of contracting COVID-19 in harsh congregate settings, refugee lawyers say.

Julia Sande, Human Rights Law and Policy Campaigner with Amnesty, called the increase in detentions “disappointing but not surprising,” although she was reluctant to draw conclusions from limited data.

The number of immigration detainees in Canada dropped early in the pandemic, from a daily average of 301 in the fourth quarter (January through March) of 2019-20 to 126 in the first quarter (April through June) of 2020-21.

FEW NO-SHOWS AS DETENTIONS DROPPED

Detaining fewer people did not result in a significant increase in no-shows at immigration hearings – the most common reason for detention, according to Immigration and Refugee Board data.

The average number of no-shows as a percentage of admissibility hearings was about 5.5% in 2021, according to that data, compared to about 5.9% in 2019.

No-shows rose as high as 16% in October 2020, but a spokesperson for the Immigration and Refugee Board said this was due to people not receiving notifications when their hearings resumed after a pause in the pandemic.

Refugee lawyer Andrew Brouwer said the decline in detention earlier in the pandemic shows Canada does not need to lock up as many non-citizens.

“We didn’t see a bunch of no-shows. We didn’t see the sky fall … It for sure shows that the system can operate without throwing people in jail,” Brouwer said.

He added that detainees face harsh pandemic conditions in provincial jails – including extended lockdowns, sometimes with three people in a cell for 23 hours a day.

Refugee lawyer Swathi Sekhar said CBSA officials and the Immigration and Refugee Board members reviewing detentions took the risk of COVID-19 into account when deciding whether someone should be detained earlier in the pandemic but are doing so less now.

“Their position is that COVID is not a factor that should weigh in favor of release,” she said.

“We also see very, very perverse findings … [decision-makers] outright saying that individuals are going to be safer in jail.”

The Immigration and Refugee Board did not immediately respond to a Reuters request for comment.

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Nasdaq futures rise as market attempts comeback from April sell-off, Meta shares soar

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Stock futures rose in overnight trading as the market shook off the April sell-off and investors reacted positively to earnings from Meta Platforms.

Futures on the Dow Jones Industrial Average added 70 points or 0.2%. S&P 500 futures gained 0.7% and Nasdaq 100 futures jumped 1.2%.

The moves came as shares of Meta surged more than 18% after hours following a beat on earnings but a miss on revenue, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.

Meanwhile, shares of Qualcomm gained 5.6% in extended trading on the back of strong earnings while PayPal rose 5% despite issuing weak guidance for the second quarter.

“I think a lot of people want to believe that earnings are going to pull us out of this, but earnings are not what got us into this,” SoFi’s Liz Young told CNBC’s “Closing Bell: Overtime” on Wednesday. “… But the reality is there are so many macro headwinds still in front of us in the next 60 days that the market is just hard to impress.”

The after-hour activity followed a volatile regular trading session that saw the Nasdaq Composite stoop to its lowest level in 2022, as stocks looked to bounce back from a tech-led April sell-off. The index is down more than 12% since the start of April.

In Wednesday’s regular trading, the tech-heavy Nasdaq ended at 12,488.93, after rising to 1.7% at session highs. The Dow Jones Industrial Average rose 61.75 points, or 0.2%, to 33,301.93 propped up by gains from Visa and Microsoft, while the S&P 500 added 0.2% to 4,183.96.

Investors await big tech earnings on Thursday from Apple, Amazon and Twitter, along with results from Robinhood. Jobless claims are also due out Thursday.

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