Beijing calls for calm after the historic crash of tech stocks

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China’s state newspaper, Securities Times, published a commentary on Wednesday acknowledging “changes in policy for certain industries” after the market crash on Monday and Tuesday that came as investors reacted to Beijing’s widespread crackdown on private companies.

“Investors should trust the market,” she wrote. “A short-term shock does not change the nature of the long-term positive trend…China’s economy and markets are at an advantage in terms of their breadth and depth.”

However, shares of Chinese technology companies swayed wildly on Wednesday.

Tencent (TCEHY) shares closed flat after news that the company’s messaging platform WeChat will temporarily suspend all new user registrations to comply with regulations regarding the upgrade of its security systems. It had earlier fallen by as much as 6.4%, before paring most of these losses. Meanwhile, Hang Seng Tech, a Nasdaq-like index that tracks the city’s largest trading technology companies, closed 3.1% higher, while Meituan closed And Alibaba (BABA) both rebounded 7.5% and 1.8%, respectively.

All of them had swings throughout the day, and at one point the posting rate was down between roughly 2% and 3%.

Monday and Tuesday were the worst two days in Mitwane ever. The company shed more than $62 billion in market value after regulators issued guidelines Monday calling for improved standards for food delivery workers. Meituan operates one of the largest food delivery platforms in China, with hundreds of millions of users transacting on its app annually.

Tencent also had its worst day in nearly a decade on Tuesday, losing more than $100 billion in market value. The losses came after regulators over the weekend ordered it to cancel its plan to acquire another music streaming player, China Music Corporation. The WeChat ad came on top of that, and it dealt another blow.

In all, three of the most valuable Chinese companies – Tencent, Meituan and Alibaba – lost more than $237 billion during the first two trading days this week. This does not even include the stock of Chinese tutoring companies, which came under attack after officials announced a crackdown on the country’s fast-growing education sector.

This week’s sell-off in Hong Kong will drop as one of the largest in history, according to Bespoke Investment Group.

“Since the end of the financial crisis, there has not been a single two-day decline in Hang Seng that has exceeded the volume of the past two days,” the company wrote in a note to clients on Tuesday, referring to the city. reference pointer.

She added that there is still potential for a short-term bounce as investors look for an opportunity in weakness.

long shadow

In recent months, China’s tech industry has suffered a series of blows from regulators. Before this week’s plunge, shares of overseas-listed Chinese technology companies had already lost a staggering $1 trillion in value between February and mid-July, according to Goldman Sachs analysts.

Now, that’s spreading as China’s crackdown continues to spread across sectors.

In the investment community, there are growing concerns that Chinese companies may be deterred from going public in the US, particularly following new requirements for those looking to list their shares overseas and a disastrous New York initial public offering by Didi (DIDI). The car-booking service giant had a huge success last month in the largest initial public offering in the United States by a Chinese company since Alibaba (BABA) debuted in 2014, raising about $4.4 billion. But just days after the uproar, Didi’s stock collapsed when Beijing launched an investigation into the company and suspended new user registrations on its main app. Since then, many Chinese companies have backed down or reconsidered plans to list in the United States. ByteDance, owner of TikTok, social e-commerce platform Xiaohongshu, fitness app Keep, and medical data company LinkDoc Technology all have either halted or canceled plans to list in New York, Bloomberg, Wall Street Journal and Financial Times report. (ByteDance declined to comment on these reports, while the rest did not respond to requests for comment last week.) On Tuesday, Hello (formerly known as Hellobike) halted plans for an initial public offering in the United States that it had made for just months. The Shanghai-based company, backed by Alibaba’s Ant Group, was planning to raise up to $100 million, and Hello did not specify why it chose to back off the stock sale. In a regulatory filing, she simply said she “no longer wishes to conduct a public offering of securities at this time.”

But she referred to regulatory restrictions in a later statement, saying: “We will continue to operate under national supervision and regulations, in addition to the requirements of the capital market environment, and we will follow up on the IPO in a timely manner.”

CNN’s Hong Kong office contributed to this report.

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