China Internet Stocks Fumble

A steep downturn in heavyweight Chinese internet stocks and recent weakness in half of the so-called FANG group have some investors worried that a key component of Wall Street’s near-decade long rally may be low on fuel, Reuters reported. Outstanding gains in Facebook, Amazon, Netflix and Alphabet have underpinned much of the US stock market’s rally in recent years, along with the broader tech sector, but the group is widely viewed as overbought and valuations remain expensive. Backed up by strong earnings growth and investor confidence in Silicon Valley’s innovation track record, the S&P 500 technology index is up 16% in 2018, making tech Wall Street’s top performer. But a recent slump in China’s own superstar technology stocks, brought into sharper focus after Tencent Holdings reported its first profit drop in almost 13% on Wednesday, has increased worries about Wall Street dependence on a handful top-shelf growth companies. Shares of Tencent, China’s largest social media and gaming company, have fallen over 6% in the past two days and are down by nearly a third from their record high close in January.