Chinese state newspaper Securities Times published a comment on Wednesday acknowledging “policy changes for some industries” after a market rout Monday and Tuesday that came as investors reacted to Beijing’s growing crackdown on private companies.
“Investors should have confidence in the market,” he writes. “A short-term shock does not change the nature of the positive long-term trend… The Chinese economy and markets are advantaged in breadth and depth.”
Despite this, Chinese tech stocks fluctuated sharply on Wednesday.
Meanwhile, the Hang Seng Tech Index, a Nasdaq-like index that tracks the city’s biggest tech companies, closed up 3.1%, while Meituan and Ali Baba (BABA) each rebounded 7.5% and 1.8%, respectively.
Each had hovered throughout the day, posting declines of between around 2% and 3% at one point.
Monday and Tuesday were the two worst days on record for Meituan. The company lost more than $ 62 billion in market capitalization after regulators on Monday issued guidelines calling for improved standards for food delivery workers. Meituan operates one of China’s largest food delivery platforms, with hundreds of millions of users transacting on its app every year.
Tencent also recorded its worst day in a decade or so on Tuesday, losing more than $ 100 billion in market value. The losses came after regulators ordered it over the weekend to drop its plan to acquire another streaming music player, China Music Corporation. WeChat’s announcement added to that, dealing another blow.
In total, three of China’s top-valued companies – Tencent, Meituan and Alibaba – have lost more than $ 237 billion in the first two days of trading this week. That doesn’t even take into account the actions of Chinese tutoring companies, which were slammed after authorities announced a crackdown on the country’s rapidly growing education sector.
This week’s Hong Kong liquidation will be one of the largest in history, according to Bespoke Investment Group.
“Since the end of the financial crisis, there has not been a single two-day drop in the Hang Seng that has exceeded the magnitude of the past two days,” the firm wrote in a note to customers on Tuesday, referring to the benchmark.
Still, there could be “potential for a short-term rebound” as investors “look for opportunities in weakness,” he added.
A long shadow
In recent months, China’s tech industry has suffered a series of heavy blows from regulators. Prior to this week’s plunge, shares of overseas-listed Chinese technology companies had already lost a staggering $ 1 trillion between February and mid-July, according to Goldman Sachs analysts.
Now this is spreading as China’s crackdown continues to spill over into all sectors.
There are growing concerns in the investment community that Chinese companies may be dissuaded from going public in the United States, especially after new requirements for those looking to list their shares overseas and an initial public offering. disastrous in New York by Didi (DIDI).
The ridesharing giant caused a sensation last month during the biggest US IPO of a Chinese company since from Alibaba (BABA) debuted in 2014, raising some $ 4.4 billion.
But just days after the fanfare, Didi’s shares collapsed when Beijing launched an investigation into the company and suspended registration of new users on its flagship app.
Since then, several Chinese companies have backed down or have reconsidered their plans to list in the United States. Owner of TikTok ByteDance, social e-commerce platform Xiaohongshu, fitness app Keep, and medical data company LinkDoc Technology have all shelved or abandoned their New York list project, Bloomberg reports show. , The Wall Street Journal and The Financial Times. (ByteDance declined to comment on these reports, while the others did not respond to requests for comment last week.)
Tuesday, Chinese self-service bicycle startup Hello (formerly Hellobike) has put aside plans for an IPO in the United States for which it had filed just a few months ago.
The Shanghai-based company, which is backed by Ant Group, a subsidiary of Alibaba, had planned to raise up to $ 100 million.
Hello did not say why he chose to opt out of the stock sale. In a regulatory dossier, he simply stated that “he no longer wishes to proceed with a public offering of securities for the moment”.
But he hinted at regulatory constraints in a subsequent statement, saying: “We will continue to operate under national supervision and its regulations, as well as the demands of a capital market environment, and will conduct an IPO on time. timely. “
– CNN’s Hong Kong office contributed to this report.
