[ad_1]
Shares in Ali Baba (BABA) and JD.com (JD) have plunged more than 10% each in Hong Kong trading since Tuesday, putting both stocks on track for their worst week of their lives.
The plunge wiped out 756 billion Hong Kong dollars ($ 97 billion) of the market value of Alibaba, the e-commerce giant founded by billionaire Jack Ma. Rival JD.com has lost 201 billion Hong Kong dollars ($ 26 billion).
Meituan Dianping, which offers similar services to Groupon and Yelp, and a games company Tencent (TCEHY), have also lost billions of dollars in market value. In total, the four stocks lost a total of $ 255 billion, based on the value of their Hong Kong stocks, according to data from Refinitiv.
Analysts point to signs of a Beijing crackdown as the reason for the fear. On Tuesday, the State Administration for Market Regulation, the main regulator of the Chinese market, presented he says the guidelines are aimed at preventing internet monopolies.
The guidelines are still in draft form. The regulator has said on its website that it is soliciting public opinion on the project until the end of the month and welcomes suggestions for revisions.
But coming so soon after Beijing put the brakes on the massive IPO planned by the Alibaba Ant Group subsidiary, the proposed regulations provide further evidence of a new restrictive environment for China’s biggest tech companies, long promoted by Chinese officials as national champions.
The regulator said reducing the dominance of e-commerce websites and other applications would protect fair competition in the market and ensure healthy growth in the internet economy.
“The Chinese government is concerned about actual or possible monopolistic behavior, and the sheer size of incumbents, which lead to unfair competition or crowd out new players and reduce competition,” said Jeffrey Halley, senior market analyst for Asia-Pacific in Oanda, adding that the guidelines drafted signal a “much stronger regulatory environment”.
Halley said he expects tech stocks to stay under pressure until the scale and scope of the new regulation becomes clearer.
The sale is also fueled by investors ditching the booming tech sector for stocks that follow the business cycle more closely after Pfizer’s breakthrough on a Covid-19 vaccine spurred hopes of a return to more normal life, he added.
Other analysts believe that tighter Chinese regulations could affect the growth of the internet industry, especially e-commerce sites.
“We believe the guidelines, if strictly enforced, could weaken the negotiating power of these large platforms in their dealings with traders,” Nomura analysts said in a research report Tuesday.
Citi analysts, meanwhile, said Alibaba and Pinduoduo (PDD) may be more affected than other e-commerce sites, as both of these sites rely on the use of personalized and targeted product recommendations – functionality that could be limited by new rules.
The Chinese government has stepped up its efforts recently to put pressure on fast-growing internet companies.
Last week, three government departments – the market regulator, the internet regulator and the state tax administration – called 27 internet platforms to discuss regulating the online economy. The platforms included Alibaba, Bytedance, Tencent, Pinduoduo, Baidu (START) and JD.com.
Regulators have warned of monopoly behavior and said the government will issue more regulations targeting online transactions, streaming and other services. They said they would also launch a post-Singles Day shopping season crackdown on “illegal cases,” and warned companies against inflating their sales numbers and cheating customers.
This year’s Singles Day online shopping bonanza already looks set to break records again. Alibaba said early Wednesday morning that the annual sales spree had so far grossed 372.3 billion yuan ($ 56.3 billion).
But it also came with official criticism. The China Consumers Association, a national state-backed consumer rights group, urged “rational consumption” last week and the state-run news network CCTV called for “less stuff.” »From purchasing platforms.
[ad_2]
Source link
