China’s crackdown on technology companies is hitting the markets again today amid concerns that the rebound in global growth may be fading.
Stock markets across Asia have fallen to a six-week low after Beijing sent shockwaves through global financial circles with plans to tighten restrictions on overseas listings of Chinese companies, as it puts its tech giants under much tighter scrutiny.
China’s CSI 300 index has fallen more than 1%, while Hong Kong’s Hang Seng has tumbled 2.75%, helping to pull the MSCI’s index of Asia shares outside Japan down 1%, to its lowest since late May.
An index of tech shares in Hong Kong (where several of China’s biggest online giants are listed) fell 3.75%, and has slumped by almost 12% over the last seven sessions.
The technology giants Tencent (-3.75% today) and Alibaba (-3.8%) have fallen to their lowest levels of this year today. Last night, shares in the ride-hailing operation Didi slumped by another 5% in New York, further below last month’s float price, having crashed 22% on Tuesday after regulators launched an investigation.
CNBC says the proposal to tighten restrictions on overseas listings could disrupt “a $2tn market loved by some of the biggest American investors”, and threaten IPO plans.
Beijing’s State Council said in a statement on Tuesday that the rules of “the overseas listing system for domestic enterprises” will be updated, while it will also tighten restrictions on cross-border data flows and security.
China’s market regulator also revealed yesterday it has fined a number of internet companies for failing to report earlier merger and acquisition deals for approval – another ratcheting up of pressure.
Investors are also pondering whether the recovery rebound is fading after growth slowed in the US service sector last month.
This has sent yields (or interest rates) on US government debt sliding, indicating traders are less worried about a surge of inflation forcing a tightening of monetary policy.
The minutes of the Federal Reserve’s latest meeting, released yesterday, show that officials held a vigorous discussion on whether the economic rebound in the US would soon be strong enough to justify slowing, or tapering, its pandemic-era stimulus measures.
The European Central Bank is publishing the results of a strategy review today, which could result in a change to its price stability target for the first time in almost two decades.
The current goal of inflation “below, but close to, 2%” could be replaced with a more flexible target, with more room to overshoot (although the ECB’s problem has been undershooting inflation).
The ECB is also expected to announce a green shift in its monetary policy, by tilting its asset purchase schemes and collateral rules away from companies with high carbon emissions without a plan to hit net zero by 2050.
The agenda
• 9.30am BST: economic activity and social change in the UK, real-time indicators, published by Office for National Statistics
• Noon BST: European Central Bank publishes results of its strategy review
• 1.30pm BST: US weekly jobless figures
• 4pm BST: EIA weekly oil inventory data
We’ll be tracking all the main events throughout the day ... |
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