Alibaba, Tencent shares plummet 11% alongside China tech stocks as Xi tightens grip on power
China’s President Xi Jinping speaking at the opening session of the 20th Chinese Communist Party’s Congress at the Great Hall of the People in Beijing on Oct. 16, 2022.
Noel Celis | AFP | Getty Images
Chinese technology stocks tanked Monday after a political reshuffle in the world’s second-largest economy tightened President Xi Jinping’s grip on power with investors fearing this could be a negative for private firms.
Tech giants Alibaba and Tencent closed down more than 11% in Asia; search company Baidu was 12% lower while food delivery firm Meituan tanked more than 14%.
The moves come after Xi paved the way for an unprecedented third term as leader and packed the Politburo standing committee, the core circle of power in the ruling Communist Party of China, with loyalists.
That makes it unlikely that anyone would challenge any “policy mistakes” that Xi makes which could hamper growth of the tech sector, Xin Sun, senior lecturer in Chinese and East Asian business, at King’s College London said.
“Now that the new Politburo standing committee is packed with Xi’s own picks and those in rival factions … were all out, it becomes clear that no other political elite dares to challenge his policy mistakes or even deviate however slightly from his preferred policy agenda, which of course over the past few years has focused on favouring the state sector at the expense of the private one,” Sun told CNBC via email.
“As a result, it is unlikely for these policies to be reversed or corrected, leading to an extremely gloomy economic outlook.”
Under Xi’s leadership, China has implemented a raft of policy that has tightened regulation on the tech sector in areas from data protection to governing the way in which algorithms can be used.
Meanwhile, Xi has stuck to the strict “zero-Covid” policy which has seen cities, including the mega financial hub of Shanghai, locked down this year, even as most of the world has opened their economies.
These two policies have contributed to billions of dollars being wiped of the value of Chinese tech giants and companies including Tencent and Alibaba reporting their slowest growth in history this year.
“Tech stocks have never been the best friend of Xi and it’s clear that the market thinks that purge will continue,” Justin Tang, head of Asian research at United First Partners, told CNBC.
As part of the leadership reshuffle in China, Li Qiang, party secretary of Shanghai is expected to be made premier next year. Li oversaw oversaw the lockdowns and “zero-Covid” approach in Shanghai this year. He has not served as vice-premier marking a break with a long-standing tradition of the Communist Party. Li will replace outgoing Premier Li Keqiang, an official seen as pro-business.
Sun said the new leadership is largely party officials “who had limited to no prior experience or credible record in economic management,” marking another reason investors are concerned about the future.
“A rigid political regime with limited capacity to correct many of its policy mistakes, the lack of capable and experienced economic policymakers, and growing geopolitical risks, all under the leadership of a single person whose track record has proven unfriendly towards the private sector,” Sun said, explaining the negative market sentiment toward China tech stocks.
However, not all analysts are concerned about further regulatory tightening. In the last few months, Beijing has taken less dramatic regulatory action against tech giants, prompting some commentators to suggest a softening stance from the government toward internet companies.
“Some of the policy toward tech stocks has been softened,” Duncan Wrigley, chief China economist at Pantheon Macroeconomics, told CNBC’s “Street Signs Europe.”
“Overall, I think the stance of the leadership and the governments has become on balance more positive over the last year.”
Technology
AppLovin stock tanks on report SEC is investigating company over data-collection practices
The AppLovin logo arranged on a smartphone in New York, US, on Wednesday, Feb. 26, 2025.
Gabby Jones | Bloomberg | Getty Images
AppLovin shares plummeted on Monday after Bloomberg reported that the SEC has been probing the mobile advertising company over its data-collection practices.
The agency has been looking into whether the company violated agreements on pushing targeted ads to consumers, Bloomberg reported, citing people familiar with the matter. The report said that the SEC is responding to a whistleblower complained filed this year along with multiple short-seller reports, and added that neither the company nor its officials have been accused of wrongdoing.
An AppLovin spokesperson said the company doesn’t typically comment on the “existence or non-existence” of regulatory matters.
“That said, as a global public company, we regularly engage with regulators and if we get inquiries we address them in the ordinary course,” the spokesperson said in a statement. “Material developments, if any, would be disclosed through the appropriate public channels.”
The stock dropped 14% in regular trading after the report, which landed shortly before market close. It fell another 5% in extended trading.
AppLovin’s stock has been on a tear, jumping about 80% this year after soaring more than 700% in 2024. The surge has been driven by the company’s artificial intelligence technology that’s allowed it to provide better ad targeting capabilities to brands.
Last month, AppLovin was added to the S&P 500, replacing MarketAxess Holdings, at the same time that Robinhood joined the index in place of Caesars Entertainment.
AppLovin made the move into the benchmark despite a short-seller’s effort to keep it out.
In March, Fuzzy Panda Research advised the committee for the large-cap U.S. index to keep AppLovin from becoming a constituent. AppLovin shares dropped 15% in December, when the committee picked Workday to join the S&P 500.
Three notable short-seller firms, including Fuzzy Panda, have slammed AppLovin of late. The latest was Muddy Waters Research, which in March said the company’s ad tactics “systematically” violate app stores’ terms of service by “impermissibly extracting proprietary IDs from Meta, Snap, TikTok, Reddit, Google, and others.” In so doing, AppLovin is funneling targeted ads to users without their consent, Muddy Waters said.
Fuzzy Panda and Culper Research put out reports the prior month, taking aim at AppLovin’s AXON software, which drove its earnings growth and stock surge. The shares dropped 12% on Feb. 26, the day of the short reports.
After those reports were published, AppLovin CEO Adam Foroughi wrote a blog post, defending his company’s technology and practices, and taking aim at the short sellers trying to profit from AppLovin’s decline.
Figma signage appears at the New York Stock Exchange in New York as the company prepares for its shares to begin trading on July 31, 2025.
Michael Nagle | Bloomberg | Getty Images
Figma shares jumped 7% on Monday after the design software vendor’s technology was promoted by OpenAI CEO Sam Altman in an onstage demo at his company’s annual DevDay conference in San Francisco.
Altman discussed Figma’s integration into ChatGPT, which has more than 800 million monthly users. He showed how third-party applications could plug in with OpenAI’s Apps SDK, or software development framework.
“When someone’s using ChatGPT, you’ll be able to find an app by asking for it by name,” Altman said. “For example, you could sketch out a product flow for ChatGPT and then say, Figma, turn this sketch into a workable diagram. The Figma app will take over respond and complete the action.”
In addition to asking for Figma’s help by name in ChatGPT, the assistant can also suggest Figma when it’s relevant, Figma product manager Luke Zhang said in a blog post.
The rally for Figma, at its high point, was the steepest since the day of the company’s public market debut on the New York Stock Exchange in July.
Figma has been ramping up its own tools for working on app and website designs using generative AI models from OpenAI and other providers.
Subscribers to products that connect to the Apps SDK will be able to log in without leaving their ChatGPT conversations, Altman said. He said people working on products in Figma can also launch the FigJam tool to keep working on development ideas. Apps SDK is based on the Model Context Protocol, an open standard that OpenAI rival Anthropic introduced last year.
Software developers will be able to submit apps for review later in 2025, Altman said.
Over time, OpenAI will offer many ways to generate revenue through third-party integrations, Altman said. Last week, OpenAI announced a feature allowing people to buy products listed on Etsy through ChatGPT.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024