China’s regulatory crackdown has wiped billions off tech stocks — here are the risks ahead

Chinese authorities have introduced a slew of legislation in the past few months, largely aimed at the tech sector — a move that’s spooked investors and wiped out billions of dollars in value from the country’s internet giants. The legislative onslaught began in November last year when the huge initial public offering of billionaire Jack Ma’s financial technology company Ant Group was suspended.

Since then, regulators have introduced anti-monopoly legislation focused on the so-called “platform economy” which broadly refers to internet companies operating a variety of services from e-commerce to food delivery. Regulations have also aimed at bolstering critical data security and protection laws.

As a result, high-profile technology companies have faced investigations and punishments. E-commerce titan Alibaba was fined $2.8 billion in an anti-monopoly probe, and China’s largest ride-hailing firm Didi was forced to stop user registrations while regulators conduct a cybersecurity review of the company, just days after its U.S. listing.

But with most of the landmark legislation passed and visibility increasing on the requirements of companies, investors are now wondering if it’s time to jump into Chinese technology stocks. Still, sentiment remains mixed. Chinese technology firms have been caught in the geopolitical battle between the U.S. and China since the administration of President Donald Trump.

Gaming giant Tencent, TikTok owner ByteDance and telecommunications company Huawei, were all dragged into geopolitics and that remains a risk for Chinese technology companies.

China’s regulatory crackdown has wiped billions off tech stocks — here are the risks ahead, CNBC, Aug 31