China’s Season of Stock Market Turbulence Continues: A Timeline

(Bloomberg) -- China’s overhaul of tutoring companies ignited a volatile period for stock markets both onshore and in Hong Kong this summer, leaving investors on edge.

As autumn arrives traders remain on guard for what regulators may target next as the government tightens its grip on sectors ranging from private education to digital gaming, e-cigarettes, property and insurance. The debt crisis at China Evergrande Group has kept the market vigilant against potential risk contagion while looking for clues on whether Beijing would intervene.

Investors are also on the lookout for bargains and stocks that will benefit from President Xi Jinping’s “common prosperity” campaign, which is adding to continuing wild swings. 

The torrent of regulatory news out of Beijing continues. Here’s a rundown of the key developments we’ve already seen since late July to help investors gauge what’s new and likely to move markets: 

Sept. 24 - Evergrande EV Unit Slumps

• Shares of China Evergrande Group’s electric-car unit sink 23% after Bloomberg reported the company missed salary payments to some of its employees and has fallen behind on paying a number of suppliers for factory equipment. Cash flow difficulties at the company are evidence that Evergrande’s debt woes are having an impact beyond its core business.
• Evergrande’s stock falls 12%, reversing most of the previous day’s gain, after it gave no signs of meeting a Sept. 23 deadline for a coupon payment on a dollar-denominated bond. The decline followed a Bloomberg report that regulators encouraged the firm to avoid a near-term default on its dollar bonds, while Dow Jones reported authorities have signaled a reluctance to bail it out.

Sept. 23  - Hope Springs Eternal

• Battered Chinese shares from property developers to tech giants and casinos advance, as worries that a spread of China Evergrande Group’s debt woes to the broader market ebb. The distressed company said a day earlier it had “resolved” a coupon payment for an onshore note.
• Bank of America strategists warn in a note that China’s common prosperity drive could deal a blow to American multinational companies, as Chinese gross domestic product has increasingly mattered to earnings of firms in the S&P stock gauges, more so than U.S. GDP

Sept. 21 - Casinos, Property Find Respites 

• Bloomberg’s gauge of casino stocks rebound from a rout in the previous week, after officials indicate Macau’s government is open to considering opinions on its proposed revisions to casino law.
• Hong Kong property shares recover after real estate firms disputed media reports of increased pressure from the Chinese government.

Sept. 20 - Property Takes Double Whammy

• Hong Kong real estate giants suffer the biggest selloff in more than a year after Reuters reported late on Sept. 17 Chinese officials told the city’s developers that Beijing is no longer willing to tolerate what it calls monopoly behavior.
• Intensifying concerns about China Evergrande Group’s debt crisis drag down everything from bank stocks to Ping An Insurance Group Co. Little-known Chinese property developer Sinic Holdings Group Co. plunge 87% before shares are halted.

Sept. 15 - Casino Crackdown

• Casino stocks in Hong Kong lose a record $14 billion in combined market value after officials in Macau said they would change regulations to tighten restrictions on operators, including appointing government representatives to “supervise” companies in the world’s biggest gaming hub. American operators saw the worst plunges, with Sands China Ltd. sinking as much as 28%, while Wynn Macau Ltd. plunged 34%, both the steepest declines ever.
• Negative sentiment spilled over into technology stocks. Tencent Holdings Ltd. and Kuaishou Technology fell by around 3% after state media outlet Xinhua also reported on Sept. 14 that China would accelerate the drafting and implementation of Internet rules to protect minors and govern information management.

Sept. 13 - Bring Down the Walls

• Chinese technology shares fell again as traders mulled a report that the government intends to break up Ant Group Co.’s Alipay business, an earlier statement calling for better protection of gig economy workers’ rights and a renewed warning warning against blocking links to rival services.

Sept. 10 - Gaming Clarification

• Tencent Holdings Ltd. and other Chinese game-related stocks rise after a newspaper report clarified that China hasn’t imposed a freeze on new game approvals. The South China Morning Post walked back its earlier report by saying there is a slowdown in approvals, rather than a complete freeze.
• The Ministry of Human Resources and Social Security issues a statement saying that major platforms must review working conditions of gig economy workers that rely on their platforms to ensure their rights in income and labor safety, after a meeting between four government agencies and 10 major platform companies.

Sept. 9 - $60 Billion Wipeout

• Tencent Holdings Ltd. and Netease Inc. shed more than $60 billion of value as investor fears grow that Chinese regulators are preparing to tighten their grip dramatically on the world’s largest gaming industry. The Hang Seng Tech Index’s rally back toward a bull market hits a big speed bump, with the gauge tumbling 4.5%

Sept. 8 - Gaming Companies Summoned

• A pair of government agencies summoned gaming companies including Tencent Holdings Ltd. and NetEase Inc., state-run Xinhua News Agency reported. Regulators are beginning to check for illegal behavior and warned there needs to be strict oversight of game promotion, celebrity endorsements and live broadcasts in order to keep minors from becoming obsessed with gaming, according to the Xinhua report. Tencent and NetEase both slumped more than 5% in Hong Kong on the development.

Sept. 7 - Didi Takeover Report Rejected

• The Beijing municipal government rejected a report it had proposed an investment in Didi Global Inc. that could put the Chinese ride-sharing giant under state control and keep its assets within the Chinese capital. Bloomberg News had reported on Sept. 3 that such a proposal had been made, citing people familiar with the matter. The company’s U.S.-traded shares spiked as much as 9% that morning in New York.

Sept. 4 - Money Flows to Mainland Equities

• Amid the turmoil in markets, foreign investors have still added to their holdings of stocks in Shanghai and Shenzhen every month since November via trading links, according to Bloomberg calculations based on data from Hong Kong’s stock exchange.

Sept. 3 - Currying Favor With Charity

• Alibaba Group Holding Ltd. pledges 100 billion yuan ($15.5 billion) over five years toward Xi Jinping’s “common prosperity” vision, joining peers like Pinduoduo Inc. and Tencent Holdings Ltd. in donating to social causes.
• But investors were less than impressed, with Alibaba’s stock slumping in Hong Kong by 4%, mirroring reactions to similar announcements by other tech giants.
• Meanwhile, President Xi Jinping signaled his desire to repair ties with the market, announcing a new stock exchange to be opened in Beijing to serve innovative small businesses

Sept. 2 - Fresh Scrutiny Roils Tech

• Chinese regulators order car-hailing services run by eleven companies including Didi Global Inc., Meituan and Alibaba Group Holding Ltd. to rectify instances of misconduct by December, criticizing them for disrupting fair competition and hurting the interests of drivers and passengers.
• Didi joins tech giants like Meituan and JD.com in helping workers set up a union.
• Chinese tech stocks pare their gains, with Hong Kong’s Hang Seng Tech Index closing up 1.6%, trimming a rally of 3.2%, while Meituan’s 5.6% rally erodes to an advance of just 0.1%.

Sept. 1 - Bargain Hunters Lift Tech

• Despite drawing regulatory fire, Tencent Holdings Ltd. enjoys a brief respite, after Chinese investors buy a net HK$5.8 billion ($745 million) of the Hong Kong stock via trading links in August, snapping two months of outflows.

Aug. 31 - Meituan Sees Dark Clouds Ahead

• Meituan shares fluctuate despite reporting better-than-expected sales for the second quarter, after conceding it may still face significant fines, and pledges to give back to society, emphasizing programs it has set up to help delivery drivers.

Aug. 30 - Gaming and Moutai’s Shakeup

• Chinese gaming stocks plunge after regulators announce a new set of stricter rules for the nation’s games industry that limits minors to three hours a week of play time. NetEase Inc. emerges as the biggest loser, with its U.S. shares dropping by as much as 8.8%. Gaming developers and streaming platforms like Bilibili Inc. also see falls
• The Guizhou provincial government proposes replacing the chairman of Chinese liquor maker Kweichow Moutai Co. after just 17 months at the helm. The shares decline.

Aug. 27 - IPO & Entertainment

• The Hang Seng Tech index, which tracks the biggest technology stocks in China, reverses a gain in morning session following a report by Dow Jones that China will propose new regulations to block companies with large amounts of sensitive consumer data from floating shares in the U.S. Alibaba Group Holding Ltd. drops 3.9% while Tencent Holdings Ltd. loses 1.1%.
• Chinese entertainment stocks slide after the country’s Internet regulator moved to step up a crackdown on activities of fan groups and relevant online platforms. Alibaba Pictures Group Ltd. falls 9.5%, the most in six months, while Mango Excellent Media Co. drops 8.6%.
• Meanwhile, many major works of Zhao Wei, one of China’s most popular film stars, are reported to no longer play on streaming sites the previous night and her name is scrubbed from the titles’ landing pages. Zhao has built a fortune through investments including an early stake in Alibaba Pictures.

Aug. 26 - ‘Working 996’ 

• The Supreme People’s Court and Ministry of Human Resources and Social Security spell out in a lengthy essay that overly long work hours are illegal. The excessive-work culture, labeled ‘996’ because of the common practice of working 9 a.m. to 9 p.m., six days a week, pervades the country’s largest corporations, particularly Internet firms.

Aug. 24 - Tech Rebound

• The Hang Seng Tech index jumps 7.1% at the close in Hong Kong, the most since July 29. The advance adds to a gain of more than 2% in the previous session following a five-week rout that took the gauge to the lowest level since inception last year. The benchmark Hang Seng Index also ends 2.5% higher, extending two-day rises to 3.5%.

Aug. 20 - Hang Seng Index Enters Bear Market

• The Hang Seng Index slumps into a technical bear market as legislation setting out tougher rules on use of customer data and a local media commentary on online drug sales accelerate a selloff of stocks in relevant sectors. Shares of Ping An Healthcare and Technology Co. and Alibaba Health Information Technology Ltd. are among the worst hit with double-digit declines.
• Liquor shares plummet after a local media report that executive of an unnamed liquor producer will attend a symposium held by Chinese regulator over market order of the sector. Industry bellwether Kweichow Moutai Co. falls 4.4%, while Wuliangye Yibin Co. declines 7.3% and Shanxi Xinghuacun Fen Wine Factory Co. loses 9.1%.
• Shares of Chinese medical beauty firms drop after the state-run People’s Daily newspaper says in a commentary that the rising number of accidents in cosmetic surgery is alarming and the industry lacks relevant laws and regulations. Bloomage Biotechnology Corp., Imeik Technology Development Co. and Yunnan Botanee Bio-Technology Group Co. finish at least 4.7% lower.

Aug. 19 - Drivers & Streaming 

• Shares of technology firms plunge after China said it is studying proposals to further ensure the rights of drivers who work for online companies and to step up oversight of the live streaming industry. Alibaba Group Holding Ltd. and Kuaishou Technology slump to record lows in Hong Kong.

Aug. 17 - Tech & Entertainment

• The Hang Seng Tech Index drops after China’s market regulator issues draft rules on unfair competition on the Internet. Baidu Inc., NetEase Inc., Alibaba Group Holding Ltd. and Tencent Holdings Ltd. slide, with tech shares also among leading drags on the benchmark index.
• Shares of film producers and broadcasting companies fall after the People’s Daily newspaper says that the nation will tighten regulation of the entertainment sector and “idol culture”. Shanghai New Culture Media Group Co., Hunan TV & Broadcast Intermediary Co. and Alibaba Pictures Group Ltd. all close lower.

Aug. 16 - Gaming

• Tech shares including Tencent Holdings Ltd., NetEase Inc. and Bilibili Inc. slump after state media says China should tighten regulations of online games to ensure they don’t misrepresent history.

Aug. 12 - Online Insurance

• Insurance shares fall after China’s banking and insurance regulator ordered firms and local agencies to curb improper marketing and pricing practices, as well as step up user privacy protection. The watchdog encouraged companies to address these issues voluntarily and said those that failed to comply would face “severe punishment.” ZhongAn Online P&C Insurance Co. slides as much as 9.5%, Ping An Insurance Group drops as much as 2.4%, while New China Life Insurance Co. slips 1.5% in Hong Kong.

Aug. 9 - Chipmakers Slide

• Chipmakers slump after state media published a commentary saying regulators will show no tolerance in cracking down on speculators in the chip market. China’s biggest chip foundry Semiconductor Manufacturing International Corp. falls more than 5% in Shanghai, while in Hong Kong Hua Hong Semiconductor Ltd. slides 5.7%, its worst drop in nearly three months. Will Semiconductor Co. falls 5.7%, while Hubei Tech Semiconductors Co. declines 3.3%.

Aug. 6 - And Milk

• Makers of infant formula join a growing list of stocks hurt by regulatory risk. China Feihe Ltd. falls as much as 9.3%, after Xinhua reports that some experts are concerned by marketing that is making mothers choose milk powder over breastfeeding.
• Kuaishou Technology plummets almost 12% after an influential state-backed newspaper urges tighter regulation of Internet video content.

Aug. 5 - Vaping and Alcohol

• Liquor and e-cigarette stocks dip as skittish investors seize on a series of reports from state media that are seen to potentially foreshadow the next targets for stricter regulation. Shares of liquor maker Kweichow Moutai Co. slip as much as 2.8% while its peer Wuliangye Yibin Co. loses 3.8%. Tobacco vaping stock Smoore International Holdings Ltd. drops as much as 7.8% in Hong Kong. A number of biopharmaceutical firms also fall by their daily limit after a report on the harm from misuse of human growth hormone injections.

Aug. 4 - Healthy Nation

• Equity investors get some relief as shares of sneaker makers and other sports companies jump, driven higher by Beijing’s latest policy agenda for a healthy nation. Li Ning Co. surges 5.7% while Anta Sports Products Ltd. rises 4.7%.

Aug. 3 - Gamers Beware

• Tencent Holdings Ltd. tumbles as much as 11%, after Chinese state-owned media described video games as “spiritual opium” and said the country should stay alert to the harm of online games and regulate the sector as soon as possible.

July 30 - Dirt

• The benchmark CSI 300 Index closes lower, marking the worst week since late February.
• Chemical fertilizer makers are asked by the nation’s top economic planner not to excessively hoard fertilizer, drive up prices and spread misleading information. The government will also temporarily stop fertilizer exports to ensure domestic supply.
• Trust firms are banned by the nation’s banking and insurance regulator from setting up new direct non-financial units.

July 28 - Spam

• China orders Tencent Holdings Ltd and 13 other mobile software developers to rectify problems related to pop-ups within their apps, adding to a wide-ranging crackdown on the country’s tech sector. Tencent shares fall more than 5% before recovering to close higher.

July 27 - More Pressure

• Hong Kong’s Hang Seng Index records its biggest two-day loss since 2008 as shockwaves from Beijing’s intensifying crackdown continue to ripple through markets. The CSI 300 Index falls 3.5% amid a wave of panic selling.

July 26 - Eating and Living

• Investors get their first chance to react to China’s confirmation of the tutoring industry overhaul, with the CSI 300 Index falling nearly 5%. In Hong Kong the Hang Seng Index closes down 4.1%.
• Food delivery giant Meituan falls 14%, its biggest decline on record, after China releases new guidelines requiring online food platforms to ensure the welfare of delivery workers.
• Property stocks including Shimao Services Holdings Ltd. tumble after the housing ministry publishes a statement in which it says it aims to “notably improve order” in the market and crack down on violations.

July 24 - Non Profit

• China unveils a sweeping overhaul of its $100 billion education tech sector, banning companies that teach the school curriculum from making profits, raising capital or going public.
• Tencent Holding Ltd. is ordered to give up exclusive music streaming rights and is hit with a fine of 500,000 yuan ($77,295), becoming the latest Chinese Internet giant to be brought to heel by regulators.

July 23 - Record Declines

• Bloomberg reports that China is considering asking companies that offer tutoring on the school curriculum to go non-profit, as part of a sweeping set of constraints that threaten to decimate the $100 billion education tech industry. New Oriental Education & Technology Group Inc falls by a record 41% in Hong Kong, while Koolearn Technology Holding Ltd. closes 28% lower. Scholar Education Group drops 29%.

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