For weeks, optimists have said, China's crackdown on tech companies has been dented within the stock exchange , but a replacement round of regulatory anxiety has shaken that hypothesis completely.
The market price of China's internet index shares plunged nearly $200 billion in one week, as Beijing pledged to extend oversight of knowledge collection and IPO operations abroad.
The market price of tech companies has fallen by quite $1.1 trillion since its peak on February 17, with the index down about 35%, consistent with Bloomberg calculations.
A new round of uncertainty
China's specialise in data-collection giants like Didi Global has created a replacement round of uncertainty for investors who face regulatory scrutiny in areas like financial technology, antitrust practices and abusive educational institutions.
Besides big tech companies, stocks of companies linked to marketing , electric production and therefore the education industry also are in danger .
“It is impossible to work out an inexpensive or acceptable discount at now , given the uncertainties regarding the extent of the regulatory tightening,” said Catherine Chan, an analyst at Union Banca ire Privée in Hong Kong . "There could also be an extra tightening of existing investigations" and investigations into new areas, she added.
data deluge
Beijing's control of knowledge collection could affect a variety of services from food delivery, participatory transportation, and online entertainment to fintech and internet markets.
Direct marketing platforms are getting “very popular” and will become another area of focus for regulators, consistent with Jian Shi Cortese, fund manager at GAM Zurich.
Shares of Kuaishou Technology, operator of 1 of China's hottest live-streaming platforms, fell 17% for the week, the worst drop since February.
At an equivalent time, tech-savvy car manufacturers like Nio Inc and XPeng Inc also are likely to get on the alert, as long as the gathering and analysis of auto operating data - which is potentially a serious source of profits — they'll be subject to stricter government oversight, consistent with Bloomberg Intelligence.
“If the info were seen as a public good, that might be much worse than what's currently being discounted from stock prices and therefore the impact on earnings might be significant,” said Joshua Crabbe, a portfolio manager at Robeco in Hong Kong . “The discount on uncertainty would be higher.”
The worst within the us
US-listed Chinese companies are under more pressure, not least due to the continued threat of delisting. Beijing can also consider the necessity to get approvals to conduct additional share offerings within the overseas market, and therefore the Dow Jones report said that China's cybersecurity regulator plans to manage Chinese companies listed within the us .
“The US-listed companies may are under the impression that they were liable for this problem, but they're not, the responsibility lies with the Chinese regulators,” said Hans Albrecht, portfolio manager at Horizon ETF Management (Canada).
"Chinese companies listed within the US have found themselves between a rock and a tough place between Chinese and US regulators," he added.
rare opportunity
Nevertheless, some investors point to attractive valuations and a possible buying opportunity, should the sell-off continue. The Chinese central bank's move last Friday to scale back the quantity of liquidity that the majority banks must hold in reserve so as to spice up lending and support economic process could also be positive for risky assets.
"Some Chinese internet stocks are already attractive as they're trading below their historical valuations or at a reduction to their international peers," Cortesi of GAM said last Wednesday.
It added that an extra 20% drop by the Hang Seng Technology Index from the present level "could be a rare opportunity to shop for some shares of fast-growing Chinese Internet companies at very attractive prices."
The index, which incorporates dozens of Chinese technology company names listed in Hong Kong , is down 32% from its peak in mid-February, in stark contrast to the Nasdaq 100, which is hovering near record levels.
“Investors got to realize that while regulation carries downside risks, upside risks remain attractive, together of the world’s largest markets is predicted to grow,” said Peter Garnery, Denmark-based strategist at Saxo Bank. At an honest rate,” he added, “at a particular point, investors will return to Chinese tech stocks because the risk-reward ratio becomes too attractive to ignore.”
تعليقات
إرسال تعليق