The world is changing fast and to keep up you need local knowledge with global context.
China’s clamp-down on Big Tech made headlines again this weekend. Our partners at The Wall Street Journal reported that Chinese regulators zeroed in on Didi Global on Friday, days after the ride-hailing company went public, by blocking its China business from adding new users as they review the company’s cybersecurity. The second blow to Didi came two days later on Sunday, when Chinese regulators ordered app store operators in the country to remove the Didi Chuxing mobile app. This morning, the Financial Times reported that Beijing has broadened the crackdown on tech platforms following the removal of Didi from Chinese app stores and that it is targeting more US-listed companies. The regulatory crackdown sent tech shares tumbling. Tencent, which has a stake in Didi, slumped 3.6% in Hong Kong to erase its year-to-date gain. Yet another inevitable hit to Naspers, who’s stake in internet giant Tencent has made Naspers the largest constituent of the Johannesburg Stock Exchange. – Nadya Swart
Beijing’s blocking of Didi app sends peers tumbling in Hong Kong
By Jeanny Yu
(Bloomberg) –Shares of Chinese technology companies slid in Hong Kong as investors stepped back to gauge the impact from Beijing’s move to block ride-hailing giant Didi Chuxing from app stores due to data security issues.
Tencent, which has a stake in Didi, slumped 3.6% in Hong Kong to erase its year-to-date gain. Meituan, ordered by China’s antitrust watchdog to rectify practices in May, lost 5.6%, while the Hang Seng Tech Index slid 2.3% to its lowest level since May 17.
The sector is also facing increased selling pressure from technical traders after the Hang Seng Tech Index formed a bearish signal, dubbed as a death cross, when its 50-day moving average fell below the 200-day moving average in May.
Shares of Didi Global tumbled in New York on Friday after China said it’s starting a cybersecurity review of the company, just two days after it pulled off one of the biggest US stock market debuts of the past decade. The Cyberspace Administration of China announced the app ban Sunday, citing serious violations on Didi Global’s collection and usage of personal information, without elaborating.
“The new challenges on data security and privacy and ownership and use is a bigger question as it is the monetisation of this data that is the key to these companies’ earnings,” said Joshua Crabb, a senior portfolio manager at Robeco in Hong Kong. “If that becomes at risk, the earnings and hence stock price implications could be much more dramatic than the antitrust fines we have seen so far.”
Didi’s hoard of personal data poses a threat to individual privacy as well as national security, the Global Times said in a Monday commentary that lauded China’s scrutiny of the ride-hailing giant. Also on Monday, the watchdog started cybersecurity reviews on several cargo, hiring platforms.
– With assistance from Ishika Mookerjee
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.