At the beginning of the week, US-listed Chinese companies have seen their largest two-day slump since the last financial crisis in 2008.
For example, the Nasdaq Golden Dragon China Index fell almost by an astonishing 15% in the last two sessions. In comparison to its record high in February, the index has fallen by more than 45%.
The slump comes as a result of several tech and education industry crackdowns across China, which led to around $770 billion getting wiped off the value of Chinese stocks listed in the US in the last few months alone.
This last huge blow came as a result of Beijing deciding to overhaul the country’s $120 billion private tutoring sector and the massive move managed to push down the stock value of several private education firms in mainland China, the US, and Hong Kong.
Apart from this, Chinese authorities are busting and cracking down different online service providers from music streaming platforms to even food delivery apps trying to “better regulate the economy”. Interestingly, this was the only economy in 2020 that reversed the impact of COVID-19.
Last Monday, the SAMR (the State Administration for Market Regulation in China) issued a totally new set of rules in a wish to improve the employment and working conditions of the people working in the delivery business.
According to the new rules, employees in the niche must be paid the minimum wage (at least) with better training conditions, and an eased workload.
Last Tuesday, one of the largest Chinese food delivery apps, Meituan, lost an impressive 17.6% (after losing 14% the day before) on the Hong Kong trade,
Tencent shares also fell 9% in Hong Kong, following China’s orders to cancel exclusive music licensing deals with global major record labels. According to the regulators, the move aimed to tackle the company’s monopoly on the streaming online industry in the country,
As you may also know, earlier this year, Alibaba (with its 925 million mobile monthly active users) also endured a record $2.8 billion fine after state officials found that the company had abused its dominant position in the market for years.