by Jiaxing Li and Mia Castagnone at scmp.com
The rally in Alibaba Group Holding is reassuring stock analysts that Beijing’s regulatory crackdown is over. That may not reduce the risk premium in the Chinese stock market just yet, as Beijing’s investigation into Micron Technology memory chips has opened a new front in the US-China tech war.
China last week announced a cybersecurity investigation into the local sales of the US memory chips maker, targeting a US company for the first time in response to US export curbs on advanced chips and gear. The rivalry could upset the feel-good factor sparked by Alibaba’s internal business reorganisation.
At risk is US$84 billion of market value that investors have pumped into Alibaba’s shares in Hong Kong and New York on the news, and the US$3 billion-odd inflows that money managers have ploughed into the Stock Connect’s southbound and northbound channels last week.
“China’s undefined ‘investigation’ into Micron sends a clear message to Washington that new tech restrictions will come at a significant cost,” said Brock Silvers, managing director at Kaiyuan Capital in Hong Kong. “The Micron action thus represents China moving from a containment strategy to one of retaliation. As both sides seem to be acting with logic and conviction, the market should expect that the tech war has yet to reach its nadir.”