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Chinese regulators on Tuesday released draft rules aimed at preventing monopoly practices by internet companies, a move that has prompted Alibaba and other internet giants based in the country to plunge into the stock market. topicality.
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The draft rules will strengthen supervision of e-commerce markets and payment services owned by Ali Baba (BABA) and Tencent Holdings (TCEHY) in particular. Policymakers are reporting increased concern over the growing power and risks of digital platforms and their business practices.
Alibaba stock fell 8.3%, closing at 266.54 on the stock market today. Tencent stock fell 6.1% to 73.80. JD.com (JD) lost 5.6%, closing at 80.08. And Huya (HUYA) fell 5.3% to 19.91.
China’s State Administration for Market Regulation, which released the draft, said it wants to prevent platforms from dominating the market or adopting methods to block fair competition, report says. from Reuters.
The draft rules follow the postponement of Ant Group’s massive initial public offering that was slated for last week.
Ant Group’s IPO was to be the largest IPO ever. Alibaba was to have a roughly 33% stake in Ant. The decision to suspend the IPO came after officials at the Shanghai Stock Exchange said they would suspend the listing due to the company’s inability to meet the conditions amid a changing environment. regulatory.
Rise and fall of Alibaba stock
Anticipation of Ant Group’s IPO initially fueled a rise in Alibaba’s stock, which then retreated after the postponement. Stocks also fell below the 50-day moving average. These are factors to consider when determining whether the Alibaba stock is a buy or not.
The rules would also examine whether digital transactions treat customers unfairly in different ways. This would involve requiring sellers to only transact on a single platform or providing differential pricing to customers based on their buying profiles, which could potentially be banned, according to the draft. guidelines.
It would be the first time that market regulators have attempted to define what constitutes anti-competitive practices among internet companies under the law.
Chinese market regulators will seek criticism and public comment on the draft rules until November 30.
Until recently, China has taken a relatively non-participatory approach to the companies that dominate China’s burgeoning e-commerce and digital finance industries. Today, however, authorities fear that companies have grown too powerful.
To find the other best stocks to buy or watch, check out IBD stock listings and other IBD research.
Please follow Brian Deagon on Twitter at @IBD_BDeagon to learn more about tech stocks, analysis and financial markets.
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