This One Chart Shows The Impact Of China’s Tech Crackdown

This One Chart Shows The Impact Of China’s Tech Crackdown
Andrew Rummer

over 2 years ago1 min

Mentioned in story

The Chinese government’s efforts to rein in the nation’s biggest tech firms are having a clear impact on the stock market.

Check out the chart above, showing the KraneShares CSI China Internet exchange-traded fund (Ticker: KWEB) in blue and the Invesco QQQ Trust (ticker: QQQ) in pink. 

For most of the past five years, these measures of the largest tech stocks in China and the US, respectively, have moved pretty much hand in hand. But since February the KraneShares ETF – which counts Tencent, Alibaba, and Meituan as its top holdings – has tumbled 39% while the QQQ – which has Apple, Microsoft, and Amazon as its biggest investments – has climbed 8%.

China has been steadily cracking down on domestic technology giants since late last year. In November, regulators blocked Ant Group’s initial public offering (IPO) and in April they hit Alibaba with a record $2.8 billion antitrust fine. And just last week they pulled ride hailing firm Didi’s app from stores, citing data violations – days after it had listed on the US stock market. 

For now, China seems willing to exert more control over its tech champions' activities, even if it means hurting their valuations. And the recent slide in Chinese tech stocks serves as a reminder of the dangers of investing in emerging markets, where there are fewer legal protections on property. 

But – if you’re feeling brave – you could see the gap charted above as an opportunity to load up on Chinese tech stocks in the hope they’ll eventually catch up with their American compatriots. 



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