On Friday, July 9, China stocks crashed as the Chinese Communist Party cracked down on its technology sector amidst irregularities.
Last Wednesday, the country’s antitrust regulators fined some of its giant companies, which include Didi, Alibaba, and Tencent.
The State Administration for Market Regulation said that these firms were accused of violating the Anti-Monopoly Law while creating mergers and acquisitions over the last 10 years.
It added that these companies did not seek the government’s approval for their deals. This improperly added to the amount of control they had over the marketplace.
According to one analyst, one of the reasons for the country is the data privacy where Chinese companies listing in the U.S. need to make disclosures.
Last July 7, it was reported that the government is considering preventing Chinese firms from raising money through variable interest entities in the Cayman Islands.
Last year, the government authorities canceled Alibaba’s Ant Financial IPO as it received a fine of $2.8 billion.
The firm was accused of forcing brands into exclusivity contracts in return for access to its leading eCommerce platform.
As of Friday, the stocks of Alibaba lost 3.92%, with a net change of $8.15, sending its stocks to the bottom at $199.85 per share.
Likewise, Didi Global also faced a Chinese crackdown following its U.S. initial public offering as the government restricts new downloads of its app throughout the mainland.
This prevented the business from acquiring new users, though existing users can still use the company’s service.
Moreover, Didi’s stocks plummeted 5.88% or 0.70 points. This sent the stocks below at $11.21 per share.
Asia Pacific Stocks Crashed
Furthermore, Asia Pacific stocks crashed as China, which is the region’s largest economy, fluctuated. Also, the surging of coronavirus infections added to the pulldown.
In the mainland, Shanghai Composite and Shenzhen Component both fell 0.04% or 1.42 points to $3,524.09 per share and 0.26% or 38.55 points to $14,844.36 per share, respectively.
Likewise, Japan’s Nikkei 225 lost 0.63%, with a net change of $177.61 to $27,940.42 per share. Meanwhile, TOPIX declined 0.41%, with a net loss of $7.94 to $1,912.38 per share.
One of the contributing factors of the fluctuation is the rising COVID-19 cases in the country. This is especially so in Tokyo, where the Olympics will commence three weeks from now.
Organizers announced that they would ban spectators from the summer games. Additionally, the Japanese government imposed a state of emergency until August 22.
Moreover, South Korea’s KOSPI also slipped 1.07% or 34.73 points to $3,217.19. The government placed Seoul under the strictest level 4 social distancing rules.