China's tech stock surging after Hong Kong peers rebound in the U.S.
Due to Chinese regulations around the tech industry with limitations on private tuition, online business and gaming sector, stocks saw a plunge in recent months. Since then, tech companies have been trying to adapt to the challenges and still make a profit. The regulatory cut went quite deep as that money was used in taxes previously. Recently $534 million antitrust fine has been slapped on food delivery giant Meituan. With controversies around the rules and new regulations, the country's tech stock started to surge again.
China's State Administration for Market Regulation (SAMR) recently penalized food delivery giant Meituan with 3.44 billion yuan for market dominance. We previously reported how Google was fined for dominating the smartphone market with Android and Apple with in-app purchases directly by developers. Both hit hard on the wall and suffered through regulatory management as Google paid a hefty fine. Apple will allow developers to make money now without taking app-store a cut. For companies at this scale, it's a very small price to pay.
Share stat shows buyers pile in after Hang Seng Tech Index hit a record low on Thursday. The rebound of Hong Kong's Hang Seng Tech bounced to an all-time high index of 5.2%. Within the last six weeks, after the regulatory fine, it is the biggest gain. Along with Meituan, Kingsoft Corp leading software and internet service company both reached 8.9% higher. Total tech share on the Hang Seng Index rose to 3.1%, gaining much attention on the market.
Asia equity portfolio specialist in a report said, "The Meituan fine was lower than expected." The online food delivery market grew tenfold in the pandemic, along with Meituan's abuse of market dominance was coming in the way of competition among fellow companies. Market regulators explained the critical situation as the company signed merchants with "exclusive cooperation agreements". It made them unable to partner with other delivery service businesses. And those who dint want to sign the agreement suffered through punitive measures.
I.G. Markets analyst Kyle Rodda talked about the "level of volatility in the markets right now" along with explaining "noise in price action." Rebound from August 20th may seem very profitable but averaging the market of tech shares since then flattens them out quite specifically as per market evaluation. Fund managers of high tier companies and stockholders of multiple channels have the broader idea of market dominance and share predictions.
The Nasdaq Golden Dragon China Index has 98 listed firms in the U.S., concluding major business channels in China. The total evaluation jumped 5.1% last month since there was a dip of an all-time low over the previous 17 months. According to Yahoo Finance, comparing the stats with the yearly track record, it's clear that the shares fell by 31%. Mainland Chinese shares are the ideal candidates for many Chinese businesses, including tech, property, tutoring, gaming and other joint campaigns.
Investors also keep a close eye on the mainland shares as it directly impacts mini channels with regulatory concerns. A recent plan by U.S. President Joe Biden with Chinese President Xi Jinping on a virtual event chaired by Warren Buffet's business partner Charlie Munger helped lift the potential share falls in the recent event along with Alibaba holding increase by 83%, according to Bloomberg.
Recent Hong Kong trade in China tech stocks grew as Tencent ended the day with 2.9% while Alibaba closed at 8%. According to analysts, the decision concluded by SAMR concerns for "communicating with authorities and upgrading its business operations" was pretty successful, in our opinion.
There is no denying that China remains one of the dominating players in domestic technology manufacture, with many successful companies. So, it only makes sense when regulatory movement is on par.