Chinese tech stocks sold off sharply after President Xi Jinping won a third term as party leader and new data showed the country’s economy fell well short of Beijing’s growth targets.

Hong Kong’s Hang Seng Tech index fell 9.7% on Monday after China said its gross domestic product fell short of its third-quarter target. Previously, the index had only fallen as much once in a day.

The Nasdaq Golden Dragon Index, which tracks shares of U.S.-listed Chinese companies, fell 15 percent as Alibaba, JD.com and Pinduoduo came under heavy selling pressure. The figure has now fallen by about 50 percent since the end of 2021.

Fresh data on Monday showed China’s economic growth accelerated to 3.9 percent in the third quarter from a year earlier, but remained below Beijing’s annual target of 5.5 percent.

Frank Benzimra, head of Asia equity strategy at Société Générale, said investors in Chinese stocks were unnerved by the reshuffle announced Sunday in the top leadership of the Chinese Communist Party, which is made up of cadres more focused on national security than economic reform. .

Chinese tech stocks were already “highly undervalued, but now it’s not so much about the earnings profile as it is about what risk premium you want to put on these names — not just Alibaba, but for Chinese tech and the Internet in general. sector,” he added.

Alibaba fell 14 percent in trading on Wall Street on Monday, falling below the $68 a share price of its initial public offering in New York eight years ago, which at the time was the largest listing in the world.

The company has grown its revenues more than 14 times and doubled its adjusted earnings in the years since its market debut. But the group’s shares have been falling since 2020 after Beijing canceled the IPO of its digital payments subsidiary Ant Group, which was set to raise a record $37 billion. Alibaba’s 80 percent drop over that period reflects a loss of about $670 billion in stock market value. This was announced by the technology company in August its first quarterly revenue decline since its listing in New York.

Monday’s coverage of the challenges China’s biggest tech groups have faced since Beijing launched regulatory repression on the sector.

Alibaba faces growing competition from traditional e-commerce rivals JD.com and Pinduoduo and a new breed of platforms such as ByteDance’s Douyin, China’s version of TikTok.

Alibaba’s largest shareholder SoftBank, a Japanese investment group led by Masayoshi Son, has also decided to sell its stake. Since January, SoftBank has sold 213 million shares of Alibaba in prepaid forward contracts, representing about 8 percent of the Chinese group’s total shares outstanding.

The sharp drop in stock prices has squeezed middle- and upper-level salaries, which receive 30 to 40 percent or more of their total pay in stock, according to two people familiar with the matter.

One employee said the government’s crackdown on technology and falling stock prices had sapped the company of “traction and energy.”

“In the last year or two, people have stopped working a lot,” the person said, noting that they personally worked about 20 hours less per week.

Alibaba’s filings also show the company has shed more than 13,000 positions since the start of the year.

Meanwhile, growth at the group’s cloud division, long touted as Alibaba’s next big revenue driver, has slowed significantly, with sales on e-commerce sites Taobao and Tmall falling in the three months to the end of June.

“Alibaba employees are now working hard together with our merchants to prepare for the annual 11.11 Global Shopping Festival. It is illogical to use the perspective of one employee interviewed by the FT to represent Alibaba’s more than 240,000 employees,” Alibaba said.

Nian Liu contributed reporting from Beijing and Patrick Maturin in London