For weeks now, optimists have said China’s tech crackdown has been priced in by the stock market. A fresh round of regulatory angst has shaken that thesis to its core.
The market capitalization of shares in a gauge of China’s internet sector dropped by about $200 billion this week alone, as Beijing vowed to increase scrutiny over data collection and overseas listings. It has slumped by more than $1.1 trillion since a Feb. 17 peak, with the index down some 35%, according to calculations by Bloomberg.
China’s pivot to data-amassing titans such as Didi Global Inc. has created a fresh round of uncertainty for investors already dealing with scrutiny in areas such as fintech, anti-monopolistic practices and after-school tutoring. Besides Big Tech, stocks linked to live marketing, electric-vehicle production and the education industry also look vulnerable.
“It is impossible to determine a reasonable or acceptable discount at this stage, given the uncertainties related to the extent of regulatory tightening,” said Katherine Chan, an analyst at Union Bancaire Privée in Hong Kong. “There could be further tightening for existing investigations” and probes into new areas, she said.
