China has cast doubt on the future of its biggest internet companies and ignited a $290-B equity selloff.
Investors are now gaming out how bad it might get for Alibaba Group Holding Ltd., Tencent Holdings Ltd. and other Chinese internet giants as Xi Jinping’s government prepares to roll out lots of new anti-monopoly regulations.
The country’s leaders have said little about how harshly they plan to clamp down or why they decided to act now. But the draft rules released last Tuesday give the government wide latitude to rein in tech entrepreneurs like Jack Ma who until recently enjoyed an unusual amount of freedom to expand their empires across nearly every aspect of Chinese life.
The country’s internet ecosystem is dominated by two companies, Alibaba and Tencent, through a labyrinthine network of investment that encompasses the vast majority of the country’s startups in arenas from AI (SenseTime, Megvii) to fresh veggies (Meicai) and digital finance (Ant Group). Their patronage has also groomed a new generation of titans including food and travel giant Meituan and Didi Chuxing.
The anti-monopoly rules now threaten to upset that status quo with a range of potential outcomes, from a benign scenario of fines to a break-up of industry leaders.
Few China watchers know where in that spectrum authorities will land, most view this wk as the Key Reversal point.
Thursday, the benchmark US stock market indexes finished at: DJIA -317.46 to 29080.11, NAS Comp -76.84 at 11709.51, S&P 500 -35.65 to 3537.15
Volume: Trade on the NYSE came in at 1.0-B/shares exchanged.
HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish with a Very Bullish bias.
- NAS Comp +30.5% YTD
- S&P 500 +9.5% YTD
- Russell 2000 +2.4% YTD
- DJIA +1.9% YTD
Looking Ahead: Investors will receive the Producer Price Index for October and the preliminary Univ. of Michigan Index of Consumer Sentiment for November Friday.
Have a healthy day, Keep the Faith!
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