Sales in Chinese technology stocks continued for the fifth consecutive session, following the latest moves by the State Administration for Market Regulation, the Beijing authority that for months has been targeting large companies operating on the web, from the sector of ‘ e-commerce to fintech to games and ride-hailing (think of the squeeze on the industry giant Didi Global immediately after the listing in New York). The Hang Seng Tech Index dropped to 3.7% and closed at -2.57% (versus a 1.85% drop in Hong Kong’s main index), after the Chinese market regulator made publishes a new, albeit not final, version of a set of rules prohibiting unfair competition.
Baidu and NetEase lost more than 5% while Alibaba Group and Tencent Holdings fell by at least 4%. This followed Monday’s selloff in Chinese online gaming companies in the wake of state media criticism of the industry, which reflected on the US market when the Securities and Exchange Commission warned about the risks of investing in Chinese equities.
Loading…
The wide-ranging proposals released on Tuesday come after the Dragon Technology Industry ministry launched a campaign last month aimed at eradicating a range of behaviors deemed harmful to customers. The draft, above all, imposes a ban on using algorithms or fake reviews to promote goods and services. In addition to behavior expressly prohibited such as forced exclusivity agreements, companies will also not be allowed to use ploys to interfere with the operations of rival platforms or intentionally make such services incompatible with their own. The latter rule could force giants like Tencent and Alibaba to dismantle their gated ecosystems that had prevented users from accessing one company’s services from the other’s platforms.