China’s Weibo falls on Hong Kong debut

China’s Twitter-like social media platform Weibo fell during its debut on the Hong Kong stock exchange Wednesday as investors remain wary of tech during Beijing’s crackdown on the sector.

Weibo finished 7.2 percent down from its initial listing price of HK$272.80, a poor showing compared with recent first-day trade by major Chinese companies in Hong Kong.

Several US-listed Chinese tech firms such as Alibaba have held initial public offerings in Hong Kong over the past two years as the United States has stepped up scrutiny of Chinese companies.

Listing in Hong Kong is seen as a hedge against the risk of being removed from US exchanges and a way of accessing an investor base closer to their home markets.

China has also been encouraging its big-tech players to list either in Hong Kong or Shanghai.

Last week Chinese ride-hailing giant Didi Chuxing announced it would delist its shares from the New York Stock Exchange, marking the end of a cushy relationship between Wall Street and Chinese tech giants.

Weibo raised a healthy $385 million in its Hong Kong IPO, its second listing after New York’s Nasdaq.

But its tepid debut points to ongoing concerns that China’s plans to rein in the tech sector are not over.

In recent months, Chinese regulators have launched a wide-ranging clampdown on tech companies such as Alibaba, Tencent and Meituan — clipping the wings of major internet firms that wield heavy influence over consumers’ daily lives.

According to Bloomberg News, Chinese companies that managed to raise more than $100 million in their Hong Kong IPOs this year have seen an average first-session gain of 15 percent.

Weibo, which launched in 2009 and was among the earliest social media platforms in China, had 566 million monthly active users as of June, it said in a filing.

Its shares have traded on the Nasdaq since 2014.

Weibo is among the most widely used social media platforms in China, where authorities have blocked major international players such as Facebook.

Weibo said it planned to use the funds raised from its Hong Kong listing to grow its user base and for research and development.

But it cautioned that it was “subject to changing laws and regulations regarding regulatory matters, corporate governance and public disclosure” that have increased both its costs and risks of non-compliance.