$100 Billion In Three Days: China Tech Nightmare Worsens
While the world was fixated on the standoff between the West and Russia following Vladimir Putin's brazen decision to recognize Ukraine's separatist republics, Hong Kong shares took another sharp leg lower.
This is (very) topical and should be monitored closely. The Hang Seng Tech gauge fell another 2% Tuesday, hitting a new "since inception" nadir.
It was the third consecutive large daily decline and underscored heightened concerns over a prospective new crackdown by Beijing.
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L2Y (i.e. roughly since pandemic start) FB -4% BABA -47% . . . FB has normal albeit large business problems, BABA has existential problems.
Another nail (Putin’s move on Crimea, Brexit, Yellow Vest movement, Trump election, pandemic, Putin’s move on Ukraine) in the coffin of Globalization 3.0. Medium- to long-term implications for inflation?
Can’t help but wonder how much of that $1.6T lost valuation is tied to Chinese private sector shares pledged as collateral for loans with the proceeds invested for “diversification” in, say, the property sector … 😉 These tech companies with (formerly) richly-valued currency and aggressive owners would likely have a decent concentration of that sort of business. Past margin call messes tied to share pledging resulted in some reforms, I believe, but I know the practice is still widespread. Ironically, when the common prosperity drive began, various big tech controlling shareholders pledged or donated shares to Xi’s worthy causes – which have presumably been tanking ever since. I guess they’ll have to mark to market any political goodwill they bought. It’s just all so unjust for China’s poor 1%-ers! Seriously, though, I wouldn’t be surprised to see a pledged share shoe drop at some point.