The Big Tech backlash has come to China, says Jacky Wong in The Wall Street Journal. Regulators recently suspended Ant Group’s $37bn stockmarket flotation at short notice. Now they have proposed new anti-monopoly guidelines that could hit Alibaba and Tencent, the internet giants whose social-media apps and payment and e-commerce platforms dominate daily life in China.
The news rocked Chinese tech shares, says Megha Bahree on Al Jazeera. Hong Kong’s Hang Seng Technology index retreated by 11% over two days last week. China has previously taken a largely “hands-off” approach towards its domestic tech titans, but Covid-19 has made the issue of market concentration unavoidable. E-commerce accounted for roughly one-quarter of sales in China last year, but that figure is “edging towards 30%” due to the pandemic.
The draft rules would ban such practices as “selling goods below cost… and exclusive sales agreements”, says Nikki Sun in Nikkei Asia. Regulators are also concerned about the rise of online loans, which are not subject to normal bank regulations. The move “strikes at the heart” of a business model that depends upon walled technology ecosystems and “scale economies”, says a Gavekal Dragonomics note.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The new safe haven?
US Big Tech has so far received less regulatory pushback, says David Goldman in the Asia Times. The share of the five biggest tech players on the S&P 500 by market capitalisation has doubled over the past decade to 22%. Microsoft, Google and Apple collectively have one-fifth of all the cash held by companies on the index. Some 70% of “all digital advertising revenue…goes to Facebook and Google”. Indeed, so dependable are these revenue streams that the tech giants now “trade the way utilities used to”, closely tracking movements in bond yields.
The prospect of more regulation has been a “dark cloud lingering over the tech sector”, Daniel Ives of Wedbush told Teresa Rivas in Barron’s. Yet the US election results may deliver a “goldilocks scenario” for tech, with a gridlocked Congress unable to agree on antitrust measures. Biden is also likely to stabilise relations with China, helping firms such as Apple whose supply chains are “caught in the crossfire”.
In recent years successful investment performance has boiled down to buying and holding “popular technology names” and watching them soar, says Michael Mackenzie in the Financial Times. Yet it is value stocks that have been shining of late. Nevertheless, investors will continue to put a premium on the tech sector’s superior growth prospects and strong cash flow, which give it defensive characteristics, says Jim Paulsen of Leuthold Group. “Tech will underperform, it will not crater.”
-
Barclays warns of significant rise in social media investment scamsInvestment scam victims are losing an average £14k, with 61% of those falling for one over social media. Here's how to spot one and keep your money safe
-
Over a thousand savings accounts now offer inflation-busting rates – how long will they stick around?The rate of UK inflation slowed again in March, boosting the opportunity for savers to earn real returns on cash in the bank. But you will need to act fast to secure the best deals.
-
The industry at the heart of global technologyThe semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
-
Three emerging Asian markets to invest inProfessional investor Chetan Sehgal of Templeton Emerging Markets Investment Trust tells us where he’d put his money
-
What to consider before investing in small-cap indexesSmall-cap index trackers show why your choice of benchmark can make a large difference to long-term returns
-
Why space investments are the way to go for investorsSpace investments will change our world beyond recognition, UK investors should take note
-
Time to tap into Africa’s mobile money boomFavourable demographics have put Africa on the path to growth when it comes to mobile money and digital banking
-
M&S is back in fashion: but how long can this success last?M&S has exceeded expectations in the past few years, but can it keep up the momentum?
-
The end of China’s boomLike the US, China too got fat on fake money. Now, China's doom is not far away.
-
Magic mushrooms — an investment boom or doom?Investing in these promising medical developments might see you embark on the trip of a lifetime.
