A Tencent sign is seen at the World Internet Conference in Wuzhen, Zhejiang province, China, on Oct 20, 2019.The Chinese stock market has seen a difficult two years. Starting with harsh regulatory crackdowns in late 2020, and then followed by strict Covid-19 lockdowns that saw entire cities grind to a standstill, the result was billions of dollars wiped off the books of China’s tech giants and once-promising enterprises.
These are positive changes — and certainly much needed — and make for good reasons to be optimistic about the reopening of the world’s second-largest economy. However, it’s not all smooth-sailing ahead. The country is still struggling with the rather abrupt reversal of its notorious zero-Covid policy, with consumption remaining depressed as a result.
In contrast to the Western-style, free-form capitalism of Silicon Valley, where powerful businesses are seen as partners to be wooed, the Communist Party of China has no qualms cracking down on what it deems to be a threat.fateful speech on Oct 24What followed was a swift and harsh crackdown on Jack Ma’s empire, starting with a suspension of Ant Group’s IPO and involving a USD2.8 billion record fine.
All these culminated in a staggering 60.7 per cent drop in the benchmark Golden Dragon China Index from its record high of Feb 19, 2021 — a situation that braver investors would recognise as a buying opportunity.Well, analysts point to the new regulations and laws that have been introduced in the wake of the tech crackdowns, which offer greater certainty moving forward .