China TikTok-Rival Kuaishou Craters, Widens China Tech Rout
(Bloomberg) — Kuaishou Technology fell the most on record after a post-listing lockup on sales of its shares expired, underscoring the extent of investors’ fears about a widening Chinese online crackdown.
The company fell as much as 15% in afternoon trading in Hong Kong, the most since a February listing. A six-month lockup period on the TikTok rival expired Aug. 4, allowing some of the video giant’s backers to finally dump their stock. Kuaishou was the biggest loser on the Hang Seng Tech Index, which fell as much as 2.6% Thursday.
The stock is now down more than 20% from its listing price. Nearly three-quarters of the company’s Class B shares — traded on the Hong Kong exchange — had been subject to lockup agreements, the last of which expired Aug. 4.
Kuaishou joins rivals like Tencent Holdings Ltd. in a widespread market selloff this week, a wave of exits triggered by mounting uncertainty over the extent, direction and severity of Beijing’s widening clampdown on a plethora of online sectors. Tencent fell as much as 5.3% Thursday, taking the losses over the past week to roughly 11%, rocked by often-confusing state media pronouncements that emphasized how scrutiny may turn next to the country’s gaming sector.
Beijing’s campaign to rein in its giant internet industry is entering its 10th month, a roller-coaster ordeal that’s prompting nervous investors to ponder the longer-term ramifications of a crackdown on firms from Jack Ma’s Ant Group Co. and Alibaba to food delivery giant Meituan and ride-hailing leader Didi.
Read more: China Should Scrap Gaming Sector Tax Breaks, State Media Argue
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Those actions demonstrated Beijing’s resolve to go after private enterprises to address social inequities, seize control of data it deems crucial to the economy and stability, and rein in powerful interests. Almost unnoticed amid a flurry of reports this week about gaming addiction was a Xinhua News Agency report outlining how regulators will soon step up oversight of how online media employ algorithms to promote content — a key aspect of services operated by Kuaishou and ByteDance Ltd., among others.
The potential scrutiny comes as Kuaishou runs into problems abroad. The Chinese company said Wednesday it will shut down its Zynn video-sharing app this month, marking the end of its ill-fated attempt to challenge ByteDance’s TikTok in the U.S. It added its overseas ambitions in markets like Southeast Asia and Latin America remained unchanged.
(Updates with details on media regulatory scrutiny)
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