Tumble: U.S. Chinese concept stocks have their biggest two-day decline since 2008 | Wall Street Journal Business and Economic News

Tumble: U.S. Chinese concept stocks have their biggest two-day decline since 2008 | Wall Street Journal Business and Economic News



In just five months, Beijing’s suppression of the technology and education industries has wiped out US$769 billion in the market value of Chinese stocks listed in the United States.

Beijing’s comprehensive suppression of its technology and education industries has caused an impact on the global market. In just five months, the market value of Chinese stocks listed in the United States has evaporated by 769 billion US dollars.

The Nasdaq Golden Dragon China Index (tracking 98 of China’s largest companies listed in the US) plunged 7% on Monday after Chinese regulators announced comprehensive reforms to the education industry, prohibiting companies that teach school subjects from making profits, raising funds, or going public This added to Friday’s 8.5% drop, bringing the index’s two-day drop to 15%, the biggest drop since 2008.

Oliver Jones, senior market economist at Capital Investment Corporation, wrote in a report to clients: “The latest incident can be said to highlight that, compared with a few years ago, the authorities are now more willing to feel for investors pursuing broader political goals. Uneasy.” “It is difficult to say exactly what will happen next in this regard, but in general, the downside risk for the stock market seems to have increased,” he said.

Some big investors have already started to sell stocks. Cathie Wood’s flagship Ark Innovation ETF this month reduced its holdings of Chinese stocks from a high of 8% in February to less than 0.5%. The fund completely withdrew from its position in technology giant Baidu, holding only 134 shares of Tencent Holdings Ltd. Its only other position, Chinese real estate website KE Holdings Inc., has fallen 60% so far this year.

Some of China’s largest education companies, Good Future Education Group, New Oriental Education Technology Group Company, and Gaotu Technology Education Company all fell at least 26% on Monday, continuing their record decline since Friday.

The stock prices of these three people have been in a long-term plunge since mid-February, with an average annual decline of 93%.

They are not alone. This year, Chinese education stocks traded in the United States, China and Hong Kong have lost more than $126 billion in market value.

JP Morgan analyst DS Kim said that China’s new policies “make these stocks almost impossible to invest.” He added that “the worst has become a reality.”

Although education and technology stocks are experiencing the most pain, other industries are also under pressure.

After regulators stated that their goal was to “significantly improve market order,” property management stocks trading in Hong Kong plummeted on Monday. At the same time, the share price of food delivery giant Meituan plummeted by a record 14% because the Beijing authorities issued a notice that online food platforms must respect the rights of food delivery personnel and ensure that workers earn at least the local minimum income.

At the same time, investors are also struggling to deal with the imminent threat that the US Securities and Exchange Commission may force the delisting of Chinese companies that do not comply with Trump-era legal requirements to disclose financial information to regulators.

Benchmark analyst Fawne Jiang said: “It is challenging for us to quantify the overall risk, but it is clear that we are entering an uncharted territory with a large number of active parts.”


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