Can business prosper amid China's regulatory crackdown and pursuit of common prosperity?

CHINA'S crackdown on its technology giants and other businesses has cost investors dearly. As at Oct 8, shares of tech giants Alibaba Group and Tencent Holdings are down by around 48 per cent from last October and 37 per cent from January, respectively. Compared to peaks in February, delivery services giant Meituan traded at around 43 per cent lower, while video platform Kuaishou, which made its trading debut in Hong Kong earlier this year, traded at about a fifth of its value as at Oct 8.

Since last year, regulatory actions have been taken against numerous firms for alleged offences ranging from antitrust abuses to data violations. In late July, China's government cracked down on the country's off-campus tutoring industry, sending dozens of listed stocks tumbling in Shanghai and Hong Kong. New rules bar for-profit companies from offering tuition in core curriculum subjects, and foreign investment in such companies. Tutoring companies that teach school subjects are now required to register as non-profit entities.

Should investors view the wide ranging regulatory crackdown as an exercise by the ruling Chinese Communist Party to humble the business elite? Or should investors see the pain suffered by stocks as part of the fallout from efforts to maintain fair and reasonable market competition, particularly in the digital space?