Despite the fact that the coronavirus is biting hard on many businesses around the world today, Chinese authorities are not considering the state of the global economy and have notably launched a concurrent crackdown on the local tech companies.
The shares of Chinese social network company known for the microblogging website Sina Weibo, Weibo Corp (NASDAQ: WB) is currently taking a hit as the firm has just been fined by the Cyberspace Administration of China. As reported by CNBC, the regulator announced this sanction on its official WeChat account, saying the company harbors accounts that violate relevant laws and regulations.
The firm was fined the sum of three million yuan (approximately $471,151) by regulators, adding to its total fine of 44 from January to November. From these broad sanctions, the firm has paid a total of 14.3 million yuan ($2.24 million).
The shares of the embattled social media company have been taking a consistent hit since listing in Hong Kong last week. While the shares have tumbled by more than 10% in Asia in the week-to-date period, the stock on the Nasdaq closed Monday’s trading session down 5.59% to $29.88. Correspondingly, the shares have slumped by over 26% in the year-to-date period.
In response to the fines, Weibo said it will put in place the necessary rectification, exercise its responsibility, and keep improving its governance.
Weibo Shares Slump: Aftermath of Concurrent Tech Crackdown
Despite the fact that the coronavirus is biting hard on many businesses around the world today, Chinese authorities are not considering the state of the global economy and have notably launched a concurrent crackdown on its homegrown tech companies in recent times.
Prior to the sanctions, companies like Ant Group, an Alibaba Group Holding Ltd (HKG: 9988) backed firm, had had their brawls with Chinese regulators. As reported by Coinspeaker, Ant Group’s Initial Public Offering was suspended by regulators back in November last year as Jack Ma had a brawl with higher powers that spilled over to the companies backed by his primary conglomerate. If the IPO had been allowed to hold, it would have probably broken a milestone record in the world.
Homegrown Chinese companies who ply their trade in the United States have also been the targets of Beijing’s harsh stance. Recently, the ride-hailing company, DiDi Global Inc (NYSE: DIDI) announced its plans to delist its shares from the New York Stock Exchange in a move that comes as a shock seeing the firm went public just a few months this year.
DiDi plans to relist the shares in Hong Kong, a situation that finally suggested that the initial move was fueled by pressures from the Chinese regulators.
A number of firms have been placed in an antitrust scrutiny probe which has seen outfits like Alibaba and delivery outfit Meituan (HKG: 3690) pay fines in the past. The tension between the US and China is also posing a serious concern for businesses that are being scrutinized by both parties in order to prevent the sharing of sensitive data.