Illustration: Eniola Odetunde/Axios
Tech stocks rebounded slightly in China after Wednesday’s selloff that had been prompted by new antitrust rules proposed by Chinese regulators.
Why it matters: The regulations could limit the power of China’s biggest tech companies. By the FT’s math, the country’s tech sector lost $290 billion in value in the space of two days.
- The Hong Kong-listed companies that took the biggest hit are Alibaba, JD.com, Xiaomi, Tencent, and Meituan.
- The Hang Seng Tech Index — comprised of the 30 top technology companies listed in Hong Kong — rose 3.2%, after falling over twice as much on Wednesday.
What’s at stake: These companies will be “forced to adapt and change, sending compliance costs higher and hurting monetization,” Mark Haefele, the chief investment officer of global wealth management at UBS, wrote in a note on Wednesday.
- But “competition has already intensified in recent years, with ‘incumbents’ (e.g., Alibaba, Tencent) losing market share to ‘disruptors’ (e.g. Pinduoduo, ByteDance), so the consequences will likely be less meaningful given reduced dominance across segments compared to a few years ago,” analysts at Morgan Stanley wrote in a note, per CNBC.
The big picture: It’s the second time this month Chinese officials have spooked investors and mucked up understanding about how tech companies will be able to operate there.
- Shares of Alibaba were hit last week, after the government halted the colossal Ant IPO listing in Shanghai (then the company pulled the Hong Kong leg, too).