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Tencent and Alibaba lose $330bn in market value since end of 2020

TSMC and CATL rise in East Asian market cap ranking shaken by China crackdown

The Chinese government's tightening of regulations on the high-tech industry is causing a significant shift in the market. (Nikkei montage/AP)

TOKYO -- The combined market cap of the top two Chinese tech companies has plunged $330 billion since the end of last year under regulatory pressure by Beijing, a Nikkei ranking of East Asian stocks shows.

In contrast, Taiwan's leading semiconductor maker and companies driving Chinese efforts to cut carbon dioxide emissions, such as producers of batteries for electric vehicles, have seen their value rise.

Nikkei ranked East Asian companies by market capitalization based on QUICK-FactSet data, finding sharp declines in the value of Chinese IT companies in the period from the end of 2020 to Aug. 30 because of antitrust fines and toughened regulations, such as listing restrictions, introduced by the Chinese government.

The market cap of top-ranked Tencent Holdings stood at $574.3 billion on Aug. 30, down about 20% from the end of 2020. Alibaba Group Holding descended from second to third place on a fall of 30% in market value to $440.6 billion as its stock price continued to hit post-listing lows. For a while in 2020, Tencent and Alibaba had followed closely behind American tech giant like Apple and Amazon in market value.

Toughened Chinese regulations are starting to hurt manufacturers of luxury goods as well. Luxury liquor producers Kweichow Moutai, ranked fifth, and Wuliangye Yibin, 20th, saw their market values shrink 20% and 30%, respectively.

Meanwhile, chipmaking giant Taiwan Semiconductor Manufacturing Co. has moved ahead. It briefly surpassed Tencent as East Asia's most valuable company on Aug. 18 as Chinese share prices tumbled. TSMC is now narrowly trailing Tencent at a market value of $564.4 billion, up more than 10% from the end of 2020.

TSMC's ascent in the ranking reflects not only declines in Chinese IT companies' share prices but also its growth on the back of soaring global demand for semiconductors.

Compared to market cap rankings a decade ago, Chinese companies continue to stay high, but there have been noticeable changes in their business sectors. The ranking at the end of 2010 was led by PetroChina and other energy companies, including CNOOC, as well as the Industrial and Commercial Bank of China and other financial institutions, reflecting China's rapid economic growth.

While the rankings of energy companies are falling at present, Contemporary Amperex Technology Ltd. (CATL), the world's biggest automobile battery maker, and leading EV manufacturer BYD Auto came to ninth and 24th places, respectively, in the latest ranking.

EV-related companies in China are given preferential treatment in marketing and other operations by the government, which has pledged that the world's second-largest economy will achieve net zero emissions of carbon dioxide by 2060.

As for national and reginal shares of the rankings of the top 200 companies by market capitalization, China had a share of more than 50% in 2021, up from zero in 1990. Although it is uncertain how far the effects of government regulation will spread, the rise in China's share is said to be partially attributable to activity such as ascents by startups, like the food delivery platform Meituan, to top market cap ranks.

South Korea, which had a 10% share in the 2010s on large caps of makers of electrical equipment and semiconductors, such as Samsung Electronics, saw its ratio fall to 6% due to drops in the value of conventional business enterprises, including steelmaker POSCO and auto parts producer Hyundai Mobis, despite rises by IT companies like Naver, which has the freeware app Line under its wing, and Kakao, owner of the messaging platform Kakao Talk.

Japan has incurred a steeper fall in the past decade than South Korea, from 38% to 27%. In 1990, when Japan's "bubble" economy was in its prime, Japanese companies, led by major commercial banks, accounted for more than 90% of the top 200 enterprises. Although they also led the global market cap ranking, Toyota Motor is at present the sole Japanese company in the East Asian top 10.

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