Tech giant Alibaba leads nearly $290-billion Chinese internet selloff

China has proposed new regulations aimed at curbing the power of its biggest internet companies

Chinese technology giants from Alibaba Group Holding to Tencent Holdings shed almost $290 billion of market value over two days of frantic selling, as investors scrambled to assess the fallout from Beijing’s broadest attempt to rein in its most powerful private-sector firms.

Technology shares tumbled for a second day after Beijing issued regulations designed to curb the growing influence of internet-sector leaders including JD.com Inc, Meituan and Xiaomi Corp. The Hang Seng Tech Index slumped more than 6 per cent on Wednesday in Hong Kong, taking its two-day loss to 11 per cent. Shares in the quintet of firms have sunk at least 11 per cent over two sessions.

Beijing on Tuesday unveiled regulations to root out monopolistic practices in the internet industry, pivoting away from a mostly hands-off approach while dealing a blow to businesses at the heart of the world’s No. 2 economy. The vaguely worded edict landed a week after new restrictions on finance triggered the shock suspension of Ant Group Co’s $35 billion initial public offering, scuppering founder Jack Ma’s ambitions to dominate online finance in the process. They also emerged on the eve of Singles’ Day, the event Ma invented a decade ago that’s evolved into the nation’s largest annual shopping spree.

”China’s Big Tech will have to rethink their business models,” said Zhan Hao, a managing partner with Beijing-based Anjie Law Firm. “The philosophy of internet companies is winner-takes-all, and especially for platform operators, they garner user traffic and build up ecosystems that are similar to each other.”

Xi Jinping’s government is increasingly curtailing the influence of the private corporations that’ve become the country’s main driver of growth. Despite sporadic crackdowns on narrow spheres from mobile gaming to online counterfeits, the likes of Alibaba and Tencent have mostly been free to acquire and invest in new businesses, becoming key backers of prominent startups while building sprawling empires that now span e-commerce, digital finance, social media and entertainment.

“I literally gasped when I first read these guidelines,” said John Dong, securities attorney at Joint-Win Partners in Shanghai. “The timing — on the eve of Singles’ Day — the forcefulness and the resolve to remake the tech giants is startling.”

Alibaba boasts $70.6 bn sales on Singles’ Day

China’s Alibaba said orders on its e-commerce platforms during the Singles’ Day shopping extravaganza had exceeded $70 billion by Wednesday evening, as lockdown-weary consumers splashed out on as many as 16 million discounted goods. “Because of Covid-19, many Chinese cannot go overseas,” Vice President Liu Bo told reporters. “This actually stimulates online consumption.” Reuters