Tencent President: "More Chinese IT Regulations to Come"... Alibaba Stock Hits All-Time Low

Martin Lau, President of Tencent
[Photo by AFP Yonhap News]

[Asia Economy Reporter Park Byung-hee] On the 19th (local time), Bloomberg reported that Alibaba's stock price fell to an all-time low as IT sector stocks collectively declined in the Hong Kong stock market.

On the day Tencent announced its Q2 earnings, CEO Martin Lau anticipated additional regulations on the IT industry by Chinese authorities, and rumors circulated that the authorities are considering further regulatory measures such as increased supervision of the streaming industry, dragging down IT stock prices.

As concerns over Chinese regulatory measures continued to spread, Alibaba Group's stock price plunged as much as 4.1% intraday, falling to an all-time low.

After announcing Q2 earnings, Tencent CEO Lau said during a conference call, "There will be more regulations from the authorities in the short term." He added, "Considering the scale and importance, regulations on IT industries like the internet have been very loose so far, so additional regulations are definitely expected."

Chinese authorities have pressured the IT industry by implementing comprehensive regulatory measures on sectors such as online education, advertising, and car-sharing companies. Bloomberg explained that due to the strengthened regulations, the market capitalization of listed Chinese IT companies decreased by nearly $1 trillion globally last month.

Alibaba's stock price in the Hong Kong stock market has fallen 29% since the beginning of this year. Tencent's stock price has also dropped about 40% compared to its peak in January.

CEO Lau stated that the Chinese government could fundamentally change how IT companies use data for advertising, and investors should prepare for a situation where Chinese authorities expand regulations on the IT industry further.

Tencent's Q2 revenue this year reached 138.3 billion yuan, a 20% increase compared to the same period last year, closely matching Wall Street's forecast of 138.2 billion yuan compiled by Bloomberg. Q2 net profit was 42.6 billion yuan, far exceeding the expected 30.8 billion yuan. Tencent announced it earned over 20 billion yuan in profits from its investment segment.

CEO Lau noted that advertising spending by online education companies, which have recently faced stricter regulations, has sharply decreased and will affect Tencent's future performance.

This content was produced with the assistance of AI translation services.