The Great Chinese Tech Spanking of 2021 - MBrew

 

TECH The Great Chinese Tech Spanking of 2021

NYC-listed, Beijing-based companies have been thrown on a bucking bronco by the Chinese government this year. And the g-forces have only been ramping up this week as China seeks to curtail its tech giants’ power and get a tighter grip on the data they hold. The crackdown has fully spooked investors: More than $800 billion of market value has been wiped from Chinese tech giants since a February peak; ride-hailing company Didi has lost more than $17 billion in value since Monday.  A brief timeline  In April, China blocked Jack Ma’s Ant Group from going public (it was on track to be the biggest IPO...ever) and forced the company to restructure. One month later, China’s Cyberspace Administration called out 105 apps, including ByteDance-owned Douyin (better known as TikTok in the US), for collecting and illegally accessing user data. Then last month, Chinese regulators reportedly tried to delay ride-hailing giant Didi Chuxing’s IPO. When Didi decided to go public anyway last week, the government halted new app downloads and user signups in China.  The latest: The China Securities Regulatory Commission is planning to close a legal loophole that has long been used by major Chinese companies, including Alibaba and Tencent, to go public in the US. The change would force companies classified under a certain corporate structure (known as the Variable Interest Entity model if you want to sound smart af) to seek the government’s approval before listing shares in the US or Hong Kong.  Looking ahead...all this could lead to a possible techxodus of up to $2 trillion worth of shares from US markets to China. Hong Kong could soon become the only place for non-Chinese investors to buy stakes in Chinese tech companies as regulators throttle firms listed in the US.  If you don’t believe us, the Hong Kong stock exchange’s holding company, Hong Kong Exchanges and Clearing, jumped as much as 6.2% yesterday.