Chinese tech stocks roiled by worsening crackdown
By Laura He, CNN Business
China is not slowing down with its historic tech crackdown.
After hitting at ride-hailing company Didi once the firm went public in the United States, Chinese regulators this week piled even more pressure on the country’s tech champions. Authorities announced a slew of anti-monopoly fines on Wednesday, as well as promises to “regulate the irregularities” among payments firms on Thursday.
Investors have been spooked by all of the turmoil. Chinese tech stocks in Hong Kong took a beating on Thursday, contributing to hundreds of billions of dollars in losses that have been mounting for months.
A bunch of antitrust fines
The latest concerns unfolded Wednesday when China’s antitrust regulator fined several internet companies — including Didi, Alibaba and Tencent — over accusations that they violated the country’s Anti-Monopoly Law while making mergers or acquisitions over the last 10 years, according to the State Administration for Market Regulation (SAMR). The regulator said the companies didn’t seek approval for the deals, which could have improperly increased the amount of control the firms had over the marketplace.
SAMR investigated 22 merger and acquisition deals — some of them from as far back as 2011 — and fined the companies 500,000 yuan ($77,174) for each case. That’s the maximum amount allowed by the law concerning such practices.
Those are still incredibly small fines, especially compared with the record $2.8 billion punishment levied on Alibaba earlier this year, when regulators accused the firm of behaving like a monopoly.
But they do come in the wake of a particularly bad run for Chinese tech, including Didi — which was banned from app stores in China on Sunday over a cybersecurity probe. The company was involved in eight of the 22 deals. Alibaba is involved in six.
The rest of the deals belong to Tencent, e-commerce site Suning.com, and food delivery app Meituan.
CNN Business has reached out to the companies for comment on the fines.
The move, which was announced late Wednesday afternoon, hammered tech shares in Hong Kong on Thursday. The Hang Seng Tech Index, which tracks the 30 largest tech firms listed in Hong Kong, tumbled 3.7% to its lowest level since October. Meituan sank 6.4%. Alibaba and Tencent slid 4.1% and 3.7%, respectively.
That contributed to what has been hundreds of billions of dollars lost in market value since Beijing stepped up the crackdown late last year. Alibaba, Tencent, and Meituan have seen a combined $710 billion evaporate in market cap from their peaks.
Regulating ‘irregularities’
Separately, China’s central bank said Thursday that it will ensure further regulation of Chinese payments companies, referencing its recent, massive overhaul of Ant Group.
“Monopolistic practices do not only exist in Ant Group, but also in other institutions. We will implement the measures that we took against Ant Group on other payment service entities,” Fan Yifei, deputy governor of the People’s Bank of China, said in a press conference on Thursday in Beijing.
“We will continue to regulate the irregularities in the payment market.”
The latest regulatory actions suggest Beijing’s drive to rein in the country’s sprawling tech sector might be far from over.
Late last week, authorities unexpectedly launched a probe into Didi and soon ordered it to be removed from app stores, accusing it of violating laws about data collection and use. It pummeled Didi’s shares in New York just days after its $4.4 billion IPO, knocking off some $29 billion from its market value.
Beijing began tightening the screws on some of the country’s tech champions late last year. In early November, regulators shelved an IPO for Jack Ma’s Ant Group at the last minute. Since then, they have investigated a slew of companies, including Alibaba, Tencent, and Meituan, for alleged monopolistic behavior or breaches of customer rights.
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