In a week of Taliban retaking Kabul, China’s tech stocks lose $560 bn
Virendra Pandit
New Delhi: It was a double whammy for China’s top businesses last week: Beijing’s crackdown on technology giants on regulatory issues continued apace, and investors were worried due to increasing uncertainties on the fate of the USD 60 billion China-Pakistan Economic Corridor (CPEC), that passes through terror-infested areas in Pakistan, in the wake of the Taliban’s recapture of Afghanistan.
Terrorists have, in recent weeks, killed many Chinese employees in Baluchistan. Even on Friday night, they launched a suicide attack on the Chinese. Due to these relentless attacks, many Chinese officials have been forced to carry guns at their workplaces.
The impact of the Taliban’s return in Kabul on the Chinese economy is yet to unfold but technology giants’ stocks slumped to new lows on Friday, wiping off USD 560 billion in market value.
Hong Hong’s benchmark index hit an almost 10-month trough on the last weekly working day on Friday as an unrelenting series of government’s regulatory crackdowns crushed worried investors’ confidence, media reported.
More than USD 560 billion in market value was wiped off Hong Kong and mainland Chinese stock exchanges last week as funds exited from once favored stocks, unsure which sectors regulators will target next.
Investors’ loss is likely to plummet further in the coming weeks with the possible spill-over of the Taliban’s militancy into the restive Uyghur Muslim-dominated Xinjiang province, bordering Afghanistan. The Taliban have said they would unfold their plans once they form a government after the US armed forces’ scheduled departure by August 31.
Chinese companies listed in the US are on pace for their longest losing streak in more than a decade after Beijing intensified its regulatory clampdown across various industries this week. American depositary receipts for technology giants have racked up losses with Tencent Holdings, Alibaba Group, and Nio erasing more than 9 percent each this week, media reported.
Due to the declines, continuing for two months, the Nasdaq Golden Dragon China Index lost nearly 8 percent of its value. In the last six months, the Index, which tracks 98 firms listed in the US that conduct a majority of their business in China, has plunged about 51 percent.
That the government is going ahead despite this decline was reflected in state-controlled media which called for tougher oversight to protect consumers, hurting liquor makers, cosmetics firms, and online pharmacies, according to media reports.
The Hang Seng Index plunged to enter a technical bear market as regulatory crackdowns spread across industries. It came after Chinese policymakers proposed regulations to further ensure the rights of drivers who work for online companies and to step up oversight of the live streaming industry.
This week, China announced tougher rules on competition in the tech sector, and warned property developer Evergrande to reduce its massive debt, while official media reported about coming regulations for liquor makers as well, with whom foreign fund managers usually park funds.
