ICS Occasional Papers

This study explores the impact of the Chinese government's crackdown on the stock prices of major Chinese technology companies, particularly Alibaba, Tencent, Meituan, Pinduoduo, JD.com, and NetEase. Utilising data from Yahoo Finance, S&P Capital IQ, and FRED, the research analyses financial performance metrics such as net income, R&D expenditure, interest rates, and housing rates. The study employs a linear regression model to evaluate the effect of the regulatory actions, introduced from November 2020 onwards, on the stock prices of these companies. The analysis incorporates dummy variables to represent the tech crackdown period and categorises companies based on growth estimates. Findings indicate a statistically significant negative impact of the tech crackdown on stock prices. This negative impact remains consistent even when companies are segregated into low-, medium-, and high-growth categories and analysed separately. The study also highlights the role of mediating variables like net income rate and housing rate, which significantly influence stock prices.