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"Shares in Tencent plunged 9.0% in Hong Kong on Tuesday amid widespread market jitters over Chinese regulatory crackdowns on high-growth sectors, including onli
by throwaway4good 5y ago
"Shares in Tencent plunged 9.0% in Hong Kong on Tuesday amid widespread market jitters over Chinese regulatory crackdowns on high-growth sectors, including online platforms and, most recently, private tutoring. Hong Kong's benchmark Hang Seng Index (.HSI) fell 4.2%."
Fascinating how the Chinese authorities seem to be regulating the these companies with complete disregard on how the stock market might react.
- woxko 5y agoFascinating that they care more about national security (in their own way) than feeding the already fat shareholders as the US would do.
- starfallg 5y ago>Fascinating how the Chinese authorities seem to be regulating the these companies with complete disregard on how the stock market might react. The stock market reaction is a part of the show. They aren't banning things despite it, they are actually flexing to show authority (albeit in a crude manner).
- itake 5y agoyeah, I wonder if they do it b/c: 1. the og investors cashed out. leaving retail holding the bag. 2. they buy the stock at a discount
- paganel 5y agoDon't think the Chinese government cares about purchasing any Chinese company's stock at a discount, if the need arises they can of course nationalise it almost on the spot.
- atatatat 5y agoChinese government individuals may, especially lower tier ones.
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- elliekelly 5y agoI think they do it because information (and control over that information) is more valuable to them in the long run than whatever economic/financial gains they might sacrifice.
- itake 5y agoThey could of added the regulation at a slower pace instead of pulling the plug on everyone.
- paganel 5y ago> with complete disregard on how the stock market might react. I personally regard this as a positive fact, and I'm generally against the policies of the current Chinese authorities. The stock market should not be the be-all and end-all of our modern society.
- fighterpilot 5y agoIt's bad because the "stock market" that people focus on are typically indices of only the largest companies, such as the S&P 500 and Nasdaq. If the concern is around performance of these particular indices, it can lead to more policies that favor large business at the expense of the small.
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- aerosmile 5y agoDoes it make sense to have strong principles and not be guided by financial incentives alone? Sure. But would it make more sense to have a solid regulatory framework to start with, as opposed to being loosey goosey for a very long time and then course correcting in a way that evaporates billions in value overnight from domestic and foreign investors? Countries and companies have a lot in common. Consider this analogy: would you want to join a company that has an excellent business model and is poised for strong growth, but the CEO is a nut case and has done several mass layoffs that have completely blindsided internal and external people? I, for one, am happy that China is tripping over itself and will give us a bit more room to breathe and figure out our own mess, so that when the inevitable takeover of Taiwan and all the other shit storms happen in the future, we'll be at least a tiny bit more prepared.
- birdyrooster 5y agoAll we can do now is hope the Taiwanese don't ratify their constitution to get rid of their claims to mainland China. If they can manage to stay the course, the US will remain unentangled with Taiwan's fate.
- malwarebytess 5y agoI think that may be part of the point. In matters of state, in China, markets react to policy not the other way around. In the west markets direct policy through a kind of indirect or virtual parliament. Whether China's approach is wise or not...I don't know.
- elefanten 5y agoWhat examples do you have of this "indirect parliament" effect? Yes various interests lobby the government all the time. But what are the best/clearest examples of the market tail wagging the policy dog?.
- malfist 5y agoThere's a whole host of examples. Pretty much anything that asks the government to accept risk or loss of a company but doesn't share profits are good examples. Net neutrality is a great example. Paying telecoms to build infrastructure that they don't build and just pocket. The case in Ohio recently where their energy company bribed officials to give them a 1 billion dollar bail out. Another is any regulation that's not done for the greater good. Like in my state you have to be a licensed bartender and have graduated from a bartending school. Guess who pushed for that requirement? It wasn't the public.
- curiousgal 5y agoInsert here any president boasting about the Dow Jones hitting a new high while they're in office
- mc32 5y agoNaively, it looks like the CCP sees the influence and heft US tech exercises on the US population and world at large. The CCP will forgo economic might (in this sector) for social stability and control every time. They do not want these titans to have more power or influence than they have so they rein them in and let them know who holds the straps.
- sudosysgen 5y agoI don't think this is so naive. Jack Ma, for example, disappeared last year shortly after a speech where he called the finance regulators incompetent and tried to use his fortune to bypass them. What probably scared the Chinese government is that he got close to getting away with it. If I recall correctly, that was the flash point for the Chinese Big Tech crackdown.
- systemvoltage 5y agoYou have it backwards. Jack Ma was scared and emerged in a video tape out of nowhere. Why would CCP be scared? That doesn’t make any sense.
- sudosysgen 5y agoHe didn't seem scared to me, and the "video tape out of nowhere" was a speech at the Bund Financial Summit in Shanghai : https://interconnected.blog/jack-ma-bund-finance-summit-speech/ https://interconnected.blog/jack-ma-bund-finance-summit-spee... Why would one of the richest men in China openly defying the most basic financial regulations, and then trying to strong-arm the regulators by IPOing as fast as possible before regulations could be finalized, thus making them hurt a lot more people, and almost getting away with it, scare the CCP? I don't know, you ask me. I have no idea how an authoritarian government could be threatened by one of the most powerful people in their society openly calling them incompetent, defying them, and trying to make laws ineffective. None at all.
- jeswin 5y agoOne scenario would have been Jack Ma (along with family, of course) being outside China wile making the statement. Given his reach and popularity, that would have been a serious blow to CCP PR. He'd lose most of his billions, but this risk existed. Most regimes and communist systems are paranoid. They'll make sure there wouldn't be another Jack Ma.
- varispeed 5y ago> on how the stock market might react. The stock market is just a facade, a theatre, to appear to the West that Chinese economy is somewhat legitimate. In reality everything is in CPC hands and all these companies only appear to be private.
- partsKnown 5y agoYep, the Chinese market is not market in the sense people are not free to buy and sell based on market influences but party demands.
- matheusmoreira 5y agoGood. Regulators shouldn't care about stock prices at all. They should always do the right thing and let the market crash if necessary.
- xxpor 5y agoThat's absurd that they shouldn't pay ANY attention. You can go too far in both directions. The stock price is an indirect indicator of the material impact of the regulation.
- matheusmoreira 5y agoRegulators should pay absolutely zero attention to stock market. If the stock price crashes, it's because the company's value was derived from the exploitation and abuse that regulations are supposed to prevent. They were never supposed to be that valuable in the first place. Regulations should cause as much damage to stock price as possible. We should measure the effectiveness of regulations by how much they tank the stock of affected companies. Real change often affects the profits of corporations. If nothing happens, then I doubt the new rules are actually gonna change anything for the better.
- xxpor 5y agoI think you're saying the purpose of regulations should be to hurt the stock price of companies. That's seriously crazy. Why not write a regulation simply outlawing public stock markets? The purpose of regulations are to make people's lives better. That could mean protecting them from harms, or preventing other undesirable outcomes. There should be a cost benefit analysis applied there. Of course some things are hard to measure so there will be arguing on the margins. The place I do agree with you is that if a company's business is doing regulation compliance (see: Intuit), then their viability shouldn't be a factor at all.
- matheusmoreira 5y agoI'm saying regulation is likely to be ineffective if it doesn't hurt stock prices.
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- hklutryhgg 5y agoThere is speculation that China is clamping down on soft tech (social apps, ...) to encourage people to work on hard tech (hardware, ...). China's semiconductor company spiked today on the stock market.
- joyeuse6701 5y agoWe (the west) may see this as shocking, but I believe this isn't equivalent to the U.S. gov't doing something that would crash the NYSE or NASDAQ. If the Chinese gov't did something that undermined real estate value, where most Chinese citizen's savings are parked, that would be more comparable.
- rsynnott 5y ago> Fascinating how the Chinese authorities seem to be regulating the these companies with complete disregard on how the stock market might react. I mean, that's fairly normal, surely? _Any_ aggressive regulatory action is going to upset the stock market; it regulatory bodies had to take the stock market's delicate feelings into account they might as well shut their doors.
- neolog 5y ago> with complete disregard on how the stock market might react Even better, they're intentionally redirecting finances away from companies they don't like.
- cyanydeez 5y agothe stock market in china is not a free market.
- beaunative 5y agoLast time I checked, plenty people on HN claiming those enterprises are branch of the government `since they operate in China`, which I still do consider to be one of the most ignorant and arrogant comment on Chinese businesses. If governments can actually be that successful in dicating and operating businesses, then the communism world would never have failed so miserably, the control the Chinese government has over companies is really no more than that of the United States governments (from federal to local), just look at how the federal governments banned all kinds of business activites, how the `do no evil` company bidding for defense contract. It's a pity many of the readers live in the imaginative world where the US is free of all evils, with China being the opposite.