Is rising regulatory risk in China’s Big Tech sector driving the smart money to Singapore and India?
- Sea’s current fortunes contrast sharply with its mainland China peers, which have been battered by Beijing’s regulatory crackdown on Big Tech
- Investors and venture capitalists are re-evaluating China’s tech sector and questioning whether the undoubted potential is worth the escalating risk
Sea, the Singapore-based tech company created by China-born entrepreneur Forrest Li in 2009, has enjoyed a stellar 2021.
The company’s stock has jumped 70 per cent in New York, buoyed by strong revenue at e-commerce service Shopee and hit game Free Fire, making its 43-year-old founder the richest person in the Southeast Asian city state.
Sea, often compared to Alibaba Group Holding and Tencent Holdings rolled into one because of its e-commerce and gaming portfolios, is now venturing into new areas such as payments.
But Sea’s current fortunes contrast sharply with its mainland China peers, which have been battered by Beijing’s regulatory crackdown on Big Tech. Tencent’s shares are currently down 40 per cent from a 2021 peak and Alibaba – owner of the South China Morning Post – is trading at less than half its level in October 2020.
The Chinese government’s war on the “irrational expansion of capital” started last autumn when the mega initial public offering of Ant Group, Alibaba’s fintech affiliate, was called off at the last minute due to uncertainty over changes to the regulatory environment. It has continued with antitrust probes into Alibaba and services giant Meituan, a draconian crackdown on private tutoring and a data security probe of ride-hailing giant Didi Chuxing.