China’s top 10 tech giants evaporate $800 billion in three months

Shares of leading mainland technology companies have plummeted in the past few months under the “supervision” of Beijing authorities. Ten IT and high-tech giants, including Alibaba and Tencent, have seen their combined market value evaporate by more than $800 billion, down 30 percent from their peak in February.

The Nikkei Shimbun reported on May 30 that the market value of Hong Kong-listed Alibaba, Tencent, Meituan, Jingdong and Crypto had fallen 20 to 40 percent from February 17, with a total market value of HK$5.1 trillion (about US$663 billion) evaporating.

The total market capitalization of five other U.S.-listed Chinese stocks – Jindo, Baidu, Lujinsha, Beili Beili, and NetEase Games – shrank by about $150 billion in the same period.

Tencent’s shares, for example, accumulated a 20% drop last Tuesday (25) compared to February this year, and closed down 2.02% on Thursday (27) after reporting a 65% year-on-year rise in net profit from January to March, amid news that it was asked by Beijing authorities to consolidate its finance-related businesses and set up a financial holding company in order to be officially regulated.

Earlier, Tencent founder Ma Huateng had been “interviewed”. Thirteen mainland fintech platforms, including Tencent, Meituan Finance, Jingdong Finance, Byte Jump, Drip Finance and Lufax, were collectively “interviewed” on April 29 and asked by authorities to “rectify” their financial products.

After the interview on the 29th, Tencent representatives were left alone to receive further “window guidance” from the regulatory authorities. The industry is widely expected that Tencent may follow in the footsteps of Alibaba.

Alibaba has been under “antitrust investigation” by the authorities since November 2020, and was heavily fined 18.2 billion yuan in April this year, and Ma’s Ant Group was required to become a financial holding company under full official supervision. At the time, the market expected Alibaba’s market value to plummet after being subjected to a series of “regulations”.

According to information on the 10 technology companies mentioned above, all of them have internal Communist Party organizations and have publicized them in the past. But according to scholarly analysis, Beijing’s intention is to prevent the development of private companies and eventually “nationalize” them.

Speaking to Radio Free Asia after the authorities “interviewed” 13 fintech companies, financial scholar Commander said that the authorities have cut off the flow of funds to the benefit of state-owned banks, but also to control public opinion and restrict the development of the private economy, which is a multi-benefit.

He said: “The government still seems to be really afraid of the development and growth of the private economy, because the development and growth of the private economy depends on whether it can get strong support from the capital market and institutional support, but unfortunately now the full-scale suppression of Ant Financial Services, Tencent and Alibaba, marking the continued dominance of the state-owned economy. The survival space of the private economy is further compressed.”

Lu Zhenning, a sociologist at Zhejiang University, analyzed the authorities’ efforts to “nationalize” the more economically active Internet sector on the one hand, and the Communist Party’s control of public freedoms on the other.

He said, “The Internet is a more favorable economic form for freedom of expression, for civil communication and interaction, as well as a form of communication and self-media, such as Taobao, WeChat, QQ, etc. These platforms are not only trading and consumption platforms, but it has gathered a large number of users.” “The Communist Party is of course very nervous and very wary of such a platform and force that can connect and even bring together the people. So they [the authorities] have to be more comprehensive and thorough in their control.”