Chinese tech stocks plummet as Beijing cracks down on online monopolies

China’s State Administration for Market Regulation (SAMR) has issued draft rules aimed at preventing unfair competition on the internet. The news triggered a selloff in Chinese listed technology stocks in Hong Kong.

The latest measure comes as part of Beijing’s broader crackdown on Chinese technology majors and covers multiple areas, including prohibitions on the way corporations are using data, and stamping out fake product reviews.

Shares in game development giant Tencent dropped 3.5% in late morning trading on Tuesday, while online retail giant Alibaba was down 2.5%.

SAMR is expected to hire third-party auditors to check whether the companies fall foul of the rules. The regulator is currently seeking public opinion on the new restrictions until September 15. It hasn’t set a date for when the regulations will come into effect if publicly approved.

Earlier this year, the regulator released new anti-monopoly guidelines targeting internet platforms. The new rules have tightened the existing restrictions faced by the country’s tech giants.

SAMR has also taken legal actions against some Chinese technology corporations, having issued hefty fines to Alibaba Group and Tencent Holdings. The regulator blocked Tencent’s plan to merge video game streaming sites Huya and DouYu over antitrust concerns. It has also initiated a probe into food delivery firm Meituan for “suspected monopolistic practices.”

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