Market history · Emerging markets ·
China's regulatory crackdown hits tech and education shares
On 30 June 2021 the ride-hailing group Didi listed in New York, raising $4.4 billion at a value of $73 billion. Two days later China's Cyberspace Administration launched a probe into the company over data security. By 26 July, after Beijing announced sweeping curbs on private tutoring, Hong Kong's Hang Seng index closed more than 4% lower and Chinese technology and education shares plunged in what Bloomberg called panic selling.
In December Didi said it would delist from the New York Stock Exchange and re-list in Hong Kong. Fortune reported its shares were then down 45% since the IPO.
The crackdown showed that regulation in China could change the economics of whole sectors at short notice, and that shares listed overseas were exposed to both US and Chinese rules.
The takeaway
Regulatory risk differs by market. A sector can be reshaped by a rule change with little notice.
Sources
- Fortune: Didi delisting ends Chinese firms' glory days on U.S. stock exchanges
- CNBC: Hong Kong's Hang Seng index closes more than 4% down as China tech and education shares plunge
- Bloomberg: China stocks tumble in 'panic selling' amid broad crackdown
- Caixin: China stocks retreat in wake of regulatory crackdown
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