$290bn wiped off Chinese tech stocks

Fallout from ill-fated Ant Group IPO continues, as Chinese regulator's anti-monopoly threat spooks investors

Almost $290bn (£220bn, €247bn) in market value has been wiped off Chinese technology stocks, as the authorities step up their regulatory threats in the wake of Ant Group’s ill-fated initial public offering (IPO).

A financial subsidiary of ecommerce giant Alibaba, Ant Group was all set to deliver the IPO before proceedings were thwarted by the government at the last minute and the deal halted. Had it gone ahead, the $37bn IPO would been the largest ever, easily dwarfing the previous record laid down by Saudi Aramco at the end of 2019.

In the wake of the debacle, China’s competition watchdog, the State Administration for Market Regulation, published new guidelines. These sought to crack down on, among other things, companies forcing customers to purchase bundles of products in order to access certain items, the use of exclusivity clauses and different treatment of customers depending on their spending data.

However, while the market had moderately reeled at the aborted IPO and other such measures to ensure competition, the ensuing comments made by Liang Tao turned out to be the real shock. Speaking at a finance summit on November 11, the vice chair of the China Banking and Insurance Regulatory Commission (CBIRC) said: “In areas where market monopoly problems exist, we should learn from international experience, strengthen our anti-monopoly examinations and ensure that a fair market order is maintained.”

Following the announcement, shares in Chinese behemoths Alibaba and JD.com both fell by more than 9 per cent, with the former losing around $97bn in market value and the latter around $26bn. Smartphone-maker Xiaomi also dropped 8.1 per cent, while China’s go-to on-demand delivery services company Meituan Dianping fell by 9.6 per cent.

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Both Shenzhen’s tech-heavy ChiNext index and Shanghai’s Star 50 index fell by more than 3 per cent as a result of Tao’s comments.

 

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