Shares in Hang Feng Technology Innovation, a leading Chinese artificial intelligence and semiconductor firm, crashed by 35% today, marking its steepest single-day decline since listing. The stock fell from 128.40p to 83.46p in early London interlisted trading, before recovering slightly to 86.20p by midday. The rout wiped approximately £2.3bn from the company's market capitalisation, according to market data.
The sell-off was triggered by a surprise announcement from Beijing's Ministry of Industry and Information Technology, which introduced new licensing requirements for companies developing advanced AI models and handling large-scale user data. Analysts at Shore Capital described the move as 'a significant escalation in regulatory risk for the sector', noting that Hang Feng generates over 70% of its revenue from domestic Chinese clients.
This is not the first time Chinese tech stocks have faced headwinds. In 2021, a sweeping crackdown on internet platforms erased billions from valuations. However, today's decline is particularly sharp because Hang Feng had been viewed as a 'national champion' in AI chips, receiving state subsidies as recently as last quarter. The sudden shift in policy has left investors questioning the stability of government support.
For UK investors, the impact is felt through pension and ISA funds that hold emerging-market equity ETFs. Many diversified portfolios include exposure to Asian tech via funds such as the iShares MSCI Emerging Markets ETF, which has a 2.3% weighting in Hang Feng. While direct holdings are limited, the broader sentiment dragged down the FTSE 100's tech sector by 1.2%, with chip designer ARM Holdings falling 0.8% in sympathy.
Richard Hunter, head of markets at Interactive Investor, commented: 'This is a stark reminder that geopolitical and regulatory risks remain elevated in Chinese equities. UK retail investors should expect heightened volatility in the short term, but long-term holders of diversified funds may see this as a temporary correction rather than a structural shift.' The Hang Seng Tech Index fell 3.1% in response, with other Chinese tech names like Tencent and Alibaba also down between 1% and 2%.