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China's Crackdown on Big Tech Causing Stocks to Crash

Another interesting development:https://cnn.com/2021/07/06/investing/didi-stock-china-probe-intl-hnk/index.html
China has a state-run economy, so going after tech for antitrust abuses could insulate the country from companies that take on unnecessary risks, including cyberthreats and potential market abuses. But some China experts believe Xi wants to avoid a situation similar to America's battle with Big Tech companies that has given companies like Facebook, Google, Amazon and Apple so much power that they are perhaps beyond the government's ability to regulate — despite several antitrust lawsuits and potential regulation. Xi may not want a competing power force in his country.

Comments

  • One type of Chinese tech stock got really killed yesterday, the companies offering after-school tutoring, the biggest of which is TAL. Declines of 65% were seen after the Party announced it might move to regulate or curtail such academic instruction. Korea went through the same type of educational reform quite a number of years ago. Wealthy families were paying exorbitant fees to tutors to help their kids get into college. In Japan and Korea, and possibly China, entrance to a university is the greatest hurdle. It is widely recognized that the quality of education in universities leaves something to be desired and that once admitted, students don’t have to work very hard to get a degree. The CCP can appear to be limiting elitism while at the same time taking control of companies that might not hew the Party line. Government intervention is mentioned as a risk factor in the prospective of EM funds, but this example is striking. I was expecting the Kristian Heugh managed funds, that have been big holders of the tutoring companies, to take a nosedive yesterday, but only MSAUX had an outsized loss of +4%.
  • edited July 24
    Thanks @BenWP : I saw where MACSX & MAINX took a hit, and wondering if it was caused by this ?
    Derf
    Checked the two funds I mentioned & no top 10 holding in TAL.
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