China's Big Tech crackdown: Fears of increased regulation largely overblown

IN THE past month, markets have been rocked by the Chinese government's intensifying crackdown on its tech sector. We believe that the fears of increased regulation are largely overblown, and the long-term growth story of this sector remains intact.

Over the past month, a series of clampdowns by the government rocked Chinese equity markets. As a result, many Chinese tech stocks tumbled to their year-to-date low as rattled investors scrambled to divest their shares.

The train of regulatory crackdowns began late last year with the cancellation of Ant Group's IPO, and has intensified in recent months. In the past week alone, the tech sector was hit with three major crackdowns, including a government ban on Tencent Music from owning exclusive rights in the online music industry.