Why Weibo, 3 IBD 50 Chinese Internet Stocks Are Selling Off
China Beefs Up Control Over Online News
IBD
June 22, 2017
CNet has reported that China's internet rules are about to get even tighter. China's internet regulator, the Cyberspace Administration of China (CAC), announced newly updated regulations on Monday that will require online news broadcasters to be licensed by the government to publish news on the internet and social media platforms. The new rules are effective from June 1st. China is notorious for its tight grip on online content. It put in place a censorship firewall, commonly known as the Great Firewall, which blocks popular sites such as Google, Twitter and Wikipedia, leaving Chinese internet users only with Chinese duplicates of the services such as Baidu and Weibo. The mainland is also set to release its version of Wikipedia in 2018. Today, the country ranks fifth from the bottom on the World Press Freedom Index, as compiled by Reporters without Borders. The revisions are the first of its kind in 12 years, according to South China Morning Post, and encompass "websites, applications,
Inform
Shares of Weibo ( WB) and majority owner Sina ( SINA) sold off sharply Thurdsay on the stock market today, amid reports that Chinese regulators are ordering a halt to Weibo and two other platforms from video and audio streaming.
Weibo shares fell 9.7% to 69.73 just after the opening bell. Sina, a member of the elite IBD 50 list, lost 6.9%. Phoenix New Media ( FENG), another one of the platforms affected along with Acfun, retreated 5.5%.
While it's not entirely clear what these sites did that triggered the crackdown, though Chinese authorities have been stepping up their efforts to curb unwanted political speech on social media. The threat of severe and abrupt regulatory action vs. Chinese firms, especially social media sites, is a risk that investors always have to consider.
E-commerce giant Alibaba ( BABA) edged down 1.1%. Alibaba owns a big stake in the Twitter-like Weibo. Momo ( MOMO) and YY ( YY), two other hot Chinese internet stocks on the IBD 50, fell 3% and 1.9%, respectively. Momo and YY rely on live video services for growth.
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