Development of the platform index: Chinese shares under pressure
Roll backwards on the stock market: With rising Corona infection figures, economic worries have also risen again on the stock exchanges. As a result, investors are turning away from cyclical stocks and are once again reaching more strongly for growth stocks. The three portfolio companies Apple, Microsoft and Amazon climbed to new highs last week, especially as further strong earnings growth is expected in the upcoming quarterly season. The sector rotation that started in the spring thus seems to have ended and to be turning back towards tech stocks.
While economic factors continue to give platform stocks a tailwind, Chinese regulatory policy has become the biggest problem. Thought regulatory uncertainty was priced in with the share price discounts of recent weeks, the investigations by China's cybersecurity authority CAC against the mobility service Didi Chuxing just two days after its IPO in the U.S. point to a new dimension in the technology war between the digital superpowers: "China and the U.S. are united: they want to put an end to Chinese IPOs in the U.S.". The great decoupling continues. Data sovereignty is the battleground of the future" writes China expert Richard Turrin on Linkedin. The authority had warned Didi about the IPO, but was not allowed to ban it. Didi apparently ignored the warning and, after the price slide, may prepare itself for lawsuits from investors for not having sufficiently pointed out this risk. If the way to the New York stock exchanges remains blocked for Chinese companies from now on or if a delisting is even forced, further price reductions cannot be ruled out. Therefore, there are currently no more Chinese stocks in the portfolio.
Due to the political restrictions described above, TikTok parent Bytedance, Linkdoc and Ximalaya have put their planned IPOs in the USA on hold. The actions of the Chinese authorities have also put pressure on new issues in recent weeks:
- The Full Truck Alliance, the "Uber for Trucks" from China, has lost about 16% of its value in the past week, however, it recovered larger losses on Friday. The company will be just like Kanzhun, operator of a job platform in China, is under investigation by the cybersecurity authority. However, Kanzhun recovered the heavy share price losses last Tuesday during the week.
- The stock of Didi Chuxing lost 20 percent of its value last week because of the aforementioned problems.
- Kuaishou Technology, one of the largest video platforms in China, fared similarly: -16 percent.
- Indian delivery platform Zomato plans to IPO on July 14 and expects a valuation of around $9 billion. ⇢ ETF Nachrichten
The author and/or related persons or companies may own the shares mentioned herein or are already invested in these shares, e.g. via an investment vehicle. This article is for general information purposes only and constitutes a free expression of opinion and not investment advice. Please also note the detailed legal information.
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