China tries to ease investor fears over crackdown: report
Issued on: 29/07/2021
China's crackdown on its biggest companiesIssued on: 29/07/2021
Chinese recent regulatory crackdown has sent stocks plunging ISAAC LAWRENCE
Beijing (AFP)
Beijing scramble to calm investors after a crackdown on some of China's biggest firms rattled markets with regulators calling bankers in for a last-minute call Wednesday night, Bloomberg reported.
The call hosted by the China Securities Regulatory Commission included executives of international investment banks, Bloomberg added.
The business models of private tutoring firms were obliterated by a shock announcement on Saturday that they must become non-profits, sending stock prices crashing.
A source with knowledge of the call on Wednesday told Bloomberg that bankers were given the impression that the sudden edicts for education companies were not going to ripple out to other industries.
The crackdown on the sector is the latest in a series of new rules for industries ranging from education to e-commerce.
Proposed new cybersecurity checks on internet firms planning foreign IPOs have been followed by shelved listings, recently.
Authorities have moved to calm spooked markets this week.
Multiple local media outlets on Wednesday night republished a commentary from the official Xinhua news agency that declared "the foundation for China's capital market development is still solid".
The recent new rules are "not restrictions and suppression targeting the relevant industries", the commentary said, arguing that the policies are instead aimed at "preventing disorderly capital expansion" and strengthening anti-trust measures.
China's recent crackdown has impacted nearly every aspect of modern life.
E-commerce empire Alibaba was hit with a record antitrust fine in April and leading ride-hailing app Didi Chuxing was banned from Chinese app stores days after its New York IPO this month.
© 2021 AFP
Beijing (AFP)
Beijing scramble to calm investors after a crackdown on some of China's biggest firms rattled markets with regulators calling bankers in for a last-minute call Wednesday night, Bloomberg reported.
The call hosted by the China Securities Regulatory Commission included executives of international investment banks, Bloomberg added.
The business models of private tutoring firms were obliterated by a shock announcement on Saturday that they must become non-profits, sending stock prices crashing.
A source with knowledge of the call on Wednesday told Bloomberg that bankers were given the impression that the sudden edicts for education companies were not going to ripple out to other industries.
The crackdown on the sector is the latest in a series of new rules for industries ranging from education to e-commerce.
Proposed new cybersecurity checks on internet firms planning foreign IPOs have been followed by shelved listings, recently.
Authorities have moved to calm spooked markets this week.
Multiple local media outlets on Wednesday night republished a commentary from the official Xinhua news agency that declared "the foundation for China's capital market development is still solid".
The recent new rules are "not restrictions and suppression targeting the relevant industries", the commentary said, arguing that the policies are instead aimed at "preventing disorderly capital expansion" and strengthening anti-trust measures.
China's recent crackdown has impacted nearly every aspect of modern life.
E-commerce empire Alibaba was hit with a record antitrust fine in April and leading ride-hailing app Didi Chuxing was banned from Chinese app stores days after its New York IPO this month.
© 2021 AFP
NOT COMMUNISM JUST GOOD OLD FASHIONED STATE CAPITALI$M
Issued on: 29/07/2021
Tech titan Tencent is among the many companies swept up in China's crackdown across multiple industries NOEL CELIS AFP/File
Beijing (AFP)
With market-trembling new rules and investigations, Beijing's crackdown on its most prominent companies has seeped into nearly every aspect of modern life, wiping billions of dollars from Chinese and Hong Kong-listed stocks and bamboozling investment sages.
From after-school tutoring to music streaming apps, and shopping to bike-sharing, stellar firms have been hit as Beijing tightens the leash on corporations, citing national security and antitrust concerns.
Whether motivated by the control reflexes of the Communist Party or to avoid market contortions hurting the pockets and safety of the Chinese public, few expect this to be the end of the crackdown.
Here are some of the sectors caught in regulators' jaws so far.
- Food delivery -
Top food delivery app Meituan's shares have fallen about 15 percent from Friday after regulators suddenly announced new worker protection rules this week.
Employers in China's booming food delivery sector, a lunchtime lifeline for millions of office workers, must now enforce minimum salary levels and "relax delivery time limits".
Meituan and rival Alibaba-owned Ele.me have come under fire in recent months after local media exposed the dangerous routes taken by drivers on tight delivery deadlines.
Hong Kong-listed Meituan's stocks had already taken a beating in April when regulators launched an antitrust probe of its lifestyle super-app, which also allows users to book entertainment, health and leisure services.
- Education -
Beijing also trotted out new rules on Saturday requiring tutoring companies to become non-profits and forbidding weekend classes, sending the valuations of private education stocks plunging. Analysts said the move made the companies virtually univestable.
The government said the industry, worth $260 billion in 2018 according to consultancy and research firm L.E.K. Consulting, had been "hijacked by capital".
The founders of New Oriental and Gaotu Techedu almost instantly lost their billionaire statuses after the rules were announced.
Their fortunes were built by capitalising on China's hyper-competitive education system where parents try to give their children any advantage they can afford.
- Ride-hailing -
Market-leader Didi Chuxing was banned from Chinese app stores in early July, just days after raising $4.4 billion in a New York IPO.
The company had gone ahead with its debut despite pushback from Chinese authorities concerned that a listing could place Didi's user data in foreign hands.
Beijing eventually sent officials from seven government departments to the firm for on-site cybersecurity investigations.
The company, whose stock has fallen around 40 per cent since its Wall Street listing, could face a multibillion dollar fine or suspension of certain operations as a punishment, Bloomberg reported last week.
- Cryptocurrency -
Beijing has also squeezed out of its market miners and traders of bitcoin and other digital currencies, arresting more than a thousand people for laundering money using cryptocurrencies in June.
China banned crypto trading in 2019 and multiple provinces have ordered energy-intensive crypto-mining outfits to shut down in recent months, citing concerns about spiking power consumption.
Analysts say China fears cryptocurrency transactions could aid illicit investment and threaten government controls on capital outflows.
The crackdown also allows China room to introduce its own digital currency, which can be monitored by the central government.
- Online shopping -
Jack Ma's e-commerce empire Alibaba was fined a record 18.2 billion yuan ($2.8 billion) by antitrust authorities in April, after the government said it had "abused its dominant position in the market" by forbidding merchants to advertise wares on rival sites.
A planned $35 billion listing by its fintech arm Ant Financial was scrapped by authorities late last year, with Ant ordered to jettison its financial services and return to its roots as an online payment platform.
- Entertainment -
Social media and entertainment behemoth Tencent has come under increasing pressure. The state market regulator shot down plans for a merger between Huya and Douyu, China's two largest video game live-streaming sites that Tencent owns stakes in. The merger would have granted it majority control over the combined entity.
Tencent's entertainment empire faced a new setback on Saturday after the State Administration for Market Regulation ruled that the company must give up its exclusive rights deals with music labels after violating antitrust laws.
Meanwhile, TikTok parent Bytedance, Tencent and dozens of other private companies were summoned by regulators in April and urged to "heed the warning" of Alibaba.
- Who's next? -
Online platforms with more than a million users have been ordered to submit to cybersecurity reviews before overseas IPOs.
This could have a chilling effect on future listings by Chinese companies as they think twice about attracting Beijing's wrath.
That also sweeps in all manner of start-ups in China's vast consumer market.
Bike-sharing platform Hello Inc said it would scrap a planned Nasdaq IPO in a regulatory filing Wednesday, shortly after the popular Pinterest-like app Xiaohongshu put similar plans on hold.
Still, it appears officials have been spooked by the reaction to their latest moves. On Wednesday regulators called top bankers in for a last-minute meeting to soothe fears about the crackdown, according to Bloomberg News.
The move came after several local media outlets on Wednesday night republished commentary from the official Xinhua news agency that declared "the foundation for China's capital market development is still solid".
Shares in badly hit tech and tuition firms rallied Thursday, while Hong Kong and mainland markets both surged after taking a beating at the start of the week.
© 2021 AFP
Beijing (AFP)
With market-trembling new rules and investigations, Beijing's crackdown on its most prominent companies has seeped into nearly every aspect of modern life, wiping billions of dollars from Chinese and Hong Kong-listed stocks and bamboozling investment sages.
From after-school tutoring to music streaming apps, and shopping to bike-sharing, stellar firms have been hit as Beijing tightens the leash on corporations, citing national security and antitrust concerns.
Whether motivated by the control reflexes of the Communist Party or to avoid market contortions hurting the pockets and safety of the Chinese public, few expect this to be the end of the crackdown.
Here are some of the sectors caught in regulators' jaws so far.
- Food delivery -
Top food delivery app Meituan's shares have fallen about 15 percent from Friday after regulators suddenly announced new worker protection rules this week.
Employers in China's booming food delivery sector, a lunchtime lifeline for millions of office workers, must now enforce minimum salary levels and "relax delivery time limits".
Meituan and rival Alibaba-owned Ele.me have come under fire in recent months after local media exposed the dangerous routes taken by drivers on tight delivery deadlines.
Hong Kong-listed Meituan's stocks had already taken a beating in April when regulators launched an antitrust probe of its lifestyle super-app, which also allows users to book entertainment, health and leisure services.
- Education -
Beijing also trotted out new rules on Saturday requiring tutoring companies to become non-profits and forbidding weekend classes, sending the valuations of private education stocks plunging. Analysts said the move made the companies virtually univestable.
The government said the industry, worth $260 billion in 2018 according to consultancy and research firm L.E.K. Consulting, had been "hijacked by capital".
The founders of New Oriental and Gaotu Techedu almost instantly lost their billionaire statuses after the rules were announced.
Their fortunes were built by capitalising on China's hyper-competitive education system where parents try to give their children any advantage they can afford.
- Ride-hailing -
Market-leader Didi Chuxing was banned from Chinese app stores in early July, just days after raising $4.4 billion in a New York IPO.
The company had gone ahead with its debut despite pushback from Chinese authorities concerned that a listing could place Didi's user data in foreign hands.
Beijing eventually sent officials from seven government departments to the firm for on-site cybersecurity investigations.
The company, whose stock has fallen around 40 per cent since its Wall Street listing, could face a multibillion dollar fine or suspension of certain operations as a punishment, Bloomberg reported last week.
- Cryptocurrency -
Beijing has also squeezed out of its market miners and traders of bitcoin and other digital currencies, arresting more than a thousand people for laundering money using cryptocurrencies in June.
China banned crypto trading in 2019 and multiple provinces have ordered energy-intensive crypto-mining outfits to shut down in recent months, citing concerns about spiking power consumption.
Analysts say China fears cryptocurrency transactions could aid illicit investment and threaten government controls on capital outflows.
The crackdown also allows China room to introduce its own digital currency, which can be monitored by the central government.
- Online shopping -
Jack Ma's e-commerce empire Alibaba was fined a record 18.2 billion yuan ($2.8 billion) by antitrust authorities in April, after the government said it had "abused its dominant position in the market" by forbidding merchants to advertise wares on rival sites.
A planned $35 billion listing by its fintech arm Ant Financial was scrapped by authorities late last year, with Ant ordered to jettison its financial services and return to its roots as an online payment platform.
- Entertainment -
Social media and entertainment behemoth Tencent has come under increasing pressure. The state market regulator shot down plans for a merger between Huya and Douyu, China's two largest video game live-streaming sites that Tencent owns stakes in. The merger would have granted it majority control over the combined entity.
Tencent's entertainment empire faced a new setback on Saturday after the State Administration for Market Regulation ruled that the company must give up its exclusive rights deals with music labels after violating antitrust laws.
Meanwhile, TikTok parent Bytedance, Tencent and dozens of other private companies were summoned by regulators in April and urged to "heed the warning" of Alibaba.
- Who's next? -
Online platforms with more than a million users have been ordered to submit to cybersecurity reviews before overseas IPOs.
This could have a chilling effect on future listings by Chinese companies as they think twice about attracting Beijing's wrath.
That also sweeps in all manner of start-ups in China's vast consumer market.
Bike-sharing platform Hello Inc said it would scrap a planned Nasdaq IPO in a regulatory filing Wednesday, shortly after the popular Pinterest-like app Xiaohongshu put similar plans on hold.
Still, it appears officials have been spooked by the reaction to their latest moves. On Wednesday regulators called top bankers in for a last-minute meeting to soothe fears about the crackdown, according to Bloomberg News.
The move came after several local media outlets on Wednesday night republished commentary from the official Xinhua news agency that declared "the foundation for China's capital market development is still solid".
Shares in badly hit tech and tuition firms rallied Thursday, while Hong Kong and mainland markets both surged after taking a beating at the start of the week.
© 2021 AFP
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