Money
China crackdown wipes billions off top companies
China’s regulatory crackdown has wiped hundreds of billions off the market capitalisations of some of its largest companies and put investors on alert over who may be next
China is cracking down on some of its largest companies with regulatory stings wiping hundreds of billions of dollars off their market value.
From technology, to education and property – it seems no sector is safe from Beijing’s far reaching tentacles.
Let’s take a closer look at who’s been affected so far.
First up is Alibaba.
China’s biggest e-commerce company was founded by this man, once China’s richest person – Jack Ma.
Ma made a speech back in October 2020 blasting the country’s regulatory system.
Those stinging comments are widely viewed as the trigger for what came next. Beijing abruptly suspended the record $37 billion stock market debut of Alibaba’s financial affiliate Ant Group.
Later, Chinese regulators fined the company $2.75 billion for abusing its market dominance. Alibaba’s U.S.-listed shares have shed more than $400 billion in value since Ma made that speech.
Next up is China’s largest gaming and social media company Tencent. It was fined for failing to report past deals to anti-trust regulators.
Tencent has also been affected by China’s latest efforts to combat gaming addiction among minors.
In August under-18-year-olds were banned from playing video games for more than three hours a week. The company has lost nearly $350 billion in market value since February.
The food delivery company – Meituan – became another target of an antitrust probe in April, after its founder and Chief Executive Wang Xing posted an ancient poem on social media.
Some perceived it as criticizing the government and President Xi Jinping. Meituan has lost more than $150 billion in value since February.
The company has also been accused of violating consumer rights and mistreating delivery drivers.
China’s largest provider of private educational services has seen its value tumble following a policy shift in Beijing.
In July, the Communist Party issued new rules barring for-profit tutoring on the school curriculum.
Since then, the market value of New Oriental Education and Technology Group’s U.S. listed shares has fallen by $7.4 billion.
Beijing wants to ease pressure on school children and reduce a cost burden on parents.
But analysts warn that the new rules threaten to decimate the country’s private education sector.
So what’s the motive behind Beijing’s regulatory crackdown?
President Xi Jinping has called for China to achieve “common prosperity.”
The campaign seeks to narrow the yawning wealth gap between the rich and the poor.”Common prosperity” as an idea is not new in China, but a sharp escalation in official rhetoric and a crackdown on excesses in industries has rattled investors in the world’s second-largest economy.
Reuters.
Investors are turning to U.S. energy shares in droves, capitalizing on surging oil prices and a resilient economy while seeking protection against looming inflationary pressures.
The S&P 500 energy sector has witnessed a remarkable ascent in 2024, boasting gains of approximately 17%, effectively doubling the broader index’s year-to-date performance.
This surge has intensified in recent weeks, propelling the energy sector to the forefront of the S&P 500’s top-performing sectors.
A significant catalyst driving this rally is the relentless rise in oil prices. U.S. crude has surged by 20% year-to-date, propelled by robust economic indicators in the United States and escalating tensions in the Middle East.
Investors are also turning to energy shares as a hedge against inflation, which has proven more persistent than anticipated, threatening to derail the broader market rally.
Ayako Yoshioka, senior portfolio manager at Wealth Enhancement Group, notes that having exposure to commodities can serve as a hedge against inflationary pressures, prompting many portfolios to overweight energy stocks.
Shell Service Station
Energy companies
This sentiment is underscored by the disciplined capital spending observed among energy companies, particularly oil majors such as Exxon Mobil and Chevron.
Among the standout performers within the energy sector this year are Marathon Petroleum, which has surged by 40%, and Valero Energy, up by an impressive 33%.
As the first-quarter earnings season kicks into high gear, with reports from major companies such as Netflix, Bank of America, and Procter & Gamble, investors will closely scrutinize economic indicators such as monthly U.S. retail sales to gauge consumer behavior amidst lingering inflation concerns.
The rally in energy stocks signals a broadening of the U.S. equities rally beyond growth and technology companies that dominated last year.
However, escalating inflation expectations and concerns about a hawkish Federal Reserve could dampen investors’ appetite for non-commodities-related sectors.
Peter Tuz, president of Chase Investment Counsel Corp., highlights investors’ focus on the robust economy amidst supply bottlenecks in commodities, especially oil.
This sentiment is echoed by strategists at Morgan Stanley and RBC Capital Markets, who maintain bullish calls on energy shares, citing heightened geopolitical risks and strong economic fundamentals.
-
Docos3 days agoS*x for sale: the real story behind OnlyFans
-
Shows3 days ago
Are ‘forever chemicals’ turning us into the ‘The Walking Dead’?
-
News3 days ago
New U.S. pilot training program aims to increase pilot diversity and solve shortages
-
Money2 days ago
How Hotspotting is driving investment advantage
-
Shows4 days ago
Mastering sales and leadership
-
News2 days ago
‘AI’ remains the big topic in big tech
-
News3 days ago
Apple removes generative ‘AI’ apps used to make deepfake nudes
-
News2 days ago
Will Biden’s AI initiative fuel innovation or halt progress?
