It wasn’t just bitcoin.
China is busy expanding a crackdown on businesses deemed to be harming the public good by being too capitalist.
A highly publicized crackdown on tutoring and techedu companies has wiped out tens of billions in value. And now Beijing has prohibited the “for profit” publicly traded sector from raising capital or going public. The move is seen by analysts as an extreme and financially destructive step to rein in private businesses that resell tutoring and techedu services.
After diving late last week when the news of the crackdown first broke, shares of Chinese education stocks listed in the U.S. plummeted even more early this week. TAL Education Group, New Oriental Education & Technology Group and Gaotu Techedu were all down by as much as a third.
According to Zerohedge, even longtime China observers have been surprised by Beijing’s sweeping actions, forcing a reconsideration of how far Xi Jinping’s Communist Party is prepared to go as it tightens its grip on the world’s second-largest economy.
While some investors believe the selloff has led to buying opportunities, ongoing crackdowns on everything from internet platform operators to commodities producers and China’s massive real estate market will increase caution for international investors.
China’s crackdown took many by surprise, even in the wake of their purge of bitcoin miners last month.
Also targeted: Alibaba, a Chinese digital behemoth registered in the U.S. that invests in education businesses among other things, dipped almost five percent. Didi Global resumed its slide, falling 13 percent. Tech companies JD.com, Baidu, NetEase, Xpeng and Nio all were also negatively hit.
The Nasdaq Golden Dragon China Index marked its worst losing streak in three years. And the end is not in sight, given the ideological warfare unleashed by the communist regime against some of its best performing companies.
With losses in Chinese tech and education companies totaling more than $1 trillion since February, traders from Shanghai to New York are wondering where authorities will strike next and if markets are correctly pricing regulatory risk.