This week, our friends at Ran Caijing bring you an eye-opening look into the effects of the Covid-19 outbreak on Chinese tech stocks. Turns out the hardest hits were to US-listed companies, while the few firms listed at home on China’s STAR Board rose during the virus period.

From the data: Chinese tech firms are in a sorry state as stock markets plummet

Li Ming, (edited by A Lun)

Ran Caijing, March 17

Global stock markets have suffered historic losses, with US shares sliding twice in a week. Stock guru Warren Buffett himself has never seen anything like such carnage. 

China’s new and rising sectors have not been spared. Since the coronavirus outbreak began in late January, share prices have dropped by an average of 20%, and as much as 64%. If you invested in China shares in mid January, you have likely lost capital. 

A few examples: Fashion platform Mogujie and social media platform Renren have both dropped 55%, credit provider Qudian has lost 40% of its value, Luckin Coffee 34%, and Meituan 20%. Even Alibaba fell by 15%.

The first wave was the week when the epidemic began to spread in China at the end of January, and the second wave was the week when the epidemic spread overseas in early March. Between the two, we saw share price recovery. In the second wave, US stock markets melted down.

This means Chinese tech stocks listed in the US have been burnt twice by this epidemic.

Stock speculators got cold feet, and non-speculators ran from their chance to witness history on the stock exchange. The only comfort is that against the backdrop of a collective global plunge, Chinese A-shares have performed better than US shares, which have fallen by 20 points; and Hong Kong stocks, which have fallen 17 points. At a drop of just 7 points, they really stand out. 

At this historic juncture, how much of the crash is down to China’s new economy companies themselves? We let the data speak.

  • More than 80% of China stocks have fallen 
  • For 60% of newly listed companies, shares have dropped below issue price

We have selected the timeframe of Jan. 21 to March 13. Although Wuhan’s lockdown was put in place on Jan. 23, share prices had begun to fall two days earlier on Jan. 21, following epidemiologist Zhong Nanshan’s statement on CCTV that there was “human-to-human transmission” of the new coronavirus. The Hang Seng Index fell 2.8% the next day. Our data comes from

Look at US-listed stocks first: Overall, of 100 new economy companies listed in the US, 85% of stocks lost value, 15% rose, and the average fall was 20%. These 20 new economy companies tumbled hardest.

From the data, it can be seen that the stock prices of seven companies have fallen by more than 50%, and their market capitalization has been cut. Among them, 3 are from Internet finance. In addition, the ninth city, Mushroom Street, and are all companies that were once brilliant and well-known, but now they have fallen or faded out of the media’s vision, and they are easily affected by the fluctuations in the environment.

Although education has been relatively untouched by the epidemic, there are three education companies on the list, Rise Center, Puxin Education, and Liulishuo for which shares fell more than 39%.

In general terms, the new economy stock market rout has been led by small cap companies valued at under USD 600 million, out of reach of unicorn status.

In Hong Kong, these have been the biggest losers to date:

US shares have fallen far harder than Hong Kong shares. Only six new economy firms listed in Hong Kong have fallen more than 30%, while of the 30 US stocks with the biggest losses, none have lost less than 30%. At the top of the Hong Kong list is 51 Credit Card, losing 40%. Software publisher iDreamSky saw its stock price fall by just 11%.

In Hong Kong, even the giants have not avoided calamity. Apart from Tencent, which fell by only 8 points, Alibaba, Meituan Dianping, and Xiaomi, worth over USD 10 billion, are all in the top 20. Lenovo, Alibaba Pictures, and China Literature also make the list.

Since the start of 2019, a total of 28 new economy companies have listed on US and Hong Kong stock markets. As of last Friday’s closing, 18 (64%) of these have seen their value fall below issue price, and eight have fallen more than 50%. Ruhnn Holding, So Young, and Douyu are among them. 

Online education bucks the trend

Online education was a breakaway success during the outbreak. Of the 20 companies with rising stock prices, six are in the online education industry. 51talk rose 56%, leading the way. NetEase Youdao, Tedu Education, Genshuixue, and New Oriental Online all rose by 20%.

ToB services have also done fairly well since the epidemic began. These include Borqs Technologies, 21Vianet, iClick, and Youzan. Due to specific industry and business characteristics, these companies also did well during the epidemic.

The rise and fall of stock prices has led to some changes in China’s internet landscape. Let’s take a look at the 20 internet companies that now have the highest market capitalization in China.

China’s top five internet companies are now Alibaba, Tencent, Meituan,, and NetEase. Pinduoduo ranks sixth, while Baidu ranks seventh. Alibaba is China’s top US-listed internet company and Hong Kong-listed internet company, with Alibaba Health also in the top 20 in China.

Finally, let’s take a look at how large domestic listings performed against the background of the outbreak and the meltdown in US stocks.

Because China’s new economy companies are mostly listed on US and Hong Kong stock markets, and A-share [translator: in essence, domestically-listed] companies are few, we can present the data of all A-share companies:

Star Semiconductor, which led the rise among domestic-listed companies, saw its stock price rocket by a factor of 10 during the course of the outbreak. Going public on Feb. 4, it hit 23 daily upper price limits, rising from its list price of RMB 12.74 ($1.8) to RMB 163, before falling back to RMB 142. However, the company’s auditors—Lixin Certified Public Accountants—have already received five letters warning of alleged violations.

Rockchip, second highest on the list, saw its stock price increase by a factor of six since listing on Feb. 7, hitting 14 consecutive daily upper price limits. Bestore went public on Feb. 24, hitting 15 consecutive upper price limits to reach 4.5 times its issue price.

32 companies doubled their value in the period examined. The company losing out most saw its shares fall by only 49.6%. 

Compared with tech companies listed in China, new economy companies listed in the US and Hong Kong lost far more during this time. 

  1. New economy companies listed in the US have been hit twice, first from Jan. 21, followed by a correction, and then from Feb. 24. 
  2. Hong Kong stocks were also shook from Jan. 21 onwards, but did not experience the same plunge US stocks did.
  3. A-shares have followed their own path, and throughout the epidemic to date, have not been hit hard.

US-listed Chinese new economy firms have fallen as much as 60%, while among Hong Kong shares the biggest losses are around 40%. The 20% gap is explained by a plunge in the US stock market. From Feb. 24 to March 13, the S&P 500 fell by 20%.

Investors have seen a major evaporation of their wealth. If you had bought any of the top 30 stocks listed on the worst performing Chinese shares list a few days before the outbreak, you would have lost at least 34% on your investment principal. Even if you had expanded your investment to all China stocks, you would have probably lost at least 20%.

All fundamental company analysis has failed. Everything is down to broader market conditions. And those who chose to increase their positions during the correction between late February and early March have been hit twice.

This roller coaster-like experience has frightened many investors. As one investor said, “The market will definitely rebound, but the key is that you do not know when all this will end.” 

In short, in this wave of plunging prices, China’s new economy companies fell sharply. As for when stock prices will return to pre-epidemic levels, it is still unknown. We should maintain that investing based on company value is not wrong. All bull markets come to an end, but they do return. 

Heather Mowbray translates economics and social interest stories from her loft in the Beijing hutongs, where she's lived for a decade. She is training to be an interpreter so she can finally interact with...