It's no secret that Chinese stocks and particularly Chinese technology stocks have not been doing great over the past two years. The Kweb Chinese Tech ETF declined by more than 80 from its peak in February of 2021 to its trough in October of 2022. It started with a three-month disappearance of Alibaba founder Jack Ma in late 2020 and the cancellation of And Group's IPO in the summer of 2021 Chinese ride-hailing company DD had its app pulled from App Stores by government Regulators just days after its IPO. Shortly thereafter, the government effectively banned the private education industry, causing online education companies like Tau Education Group to become almost worthless overnight.

These unpredictable regulatory actions led many foreign investors to view the entire Chinese stock market as uninvestable, causing the share prices of the country's once beloved Tech Giants deployment. in early 2023. it looked like the situation was finally starting to improve. The country ended the zero coveted policy it had maintained since 2020, which is expected to provide a major boost for the world's second largest economy.

But perhaps even more importantly in January Guo Shu Ching, A high-ranking member of One of China's Regulatory Agencies said that the government's Crackdown on the tech sector was finally coming to an end. On the back of these two positive developments, the Kweb ETF almost doubled in value between October of 2022. In January of 2023, it looked like the long and painful Chinese bear Market was finally coming to an end, but this relief rally proved to be short-lived China Renaissance is a publicly traded Investment Bank in China that primarily focuses on the technology industry. For example, it was one of the lead Underwriters of DD's 2021 IPO On February 16, 2023, China Renaissance announced it was unable to contact its founder and CEO Balfan with no prior warning.

the man just disappeared. Eerily similar to The Disappearance of Jack Ma. Two years ago, the company's stock price declined by almost 30 percent. On the news, 10 days later, China Renaissance made the following announcement quo.

The company has been trying to locate Mr Bell and ascertain his status. The board has become aware that Mr Bao is currently cooperating in an investigation being carried out by certain authorities in the People's Republic of China unquote. So what is going on in this video? we'll look at why Chinese CEOs have a disturbing pattern of Disappearing and what this means for the country's technology sector going forward. On The Wall Street Millennial Team A big part of our job is keeping up to date with what's going on in the world and continuously increasing our knowledge.

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Short Form publishes new book guides and articles every week, and subscribers get to vote on what books to cover to get 5 days of unlimited access and an additional 20 discount on the annual subscription. Join short form through my special link shortform.com Wall Street or click the link in the description below. Foreign founded in 2005, China Renaissance is an investment bank that provides advisory and underwriting services to Chinese tech companies that are looking to raise Capital While they may not be well known in the U.S China Renaissance is a dominant player in China having advised almost all of China's large technology companies including Tencent, Alibaba, and Baidu and perhaps most importantly, they advise the ride hailing company Dede on its disastrous 2021. IPO When a company pursues an initial public offering, they almost always have to hire an investment Bank to help them through the process.

The investment bank will perform due diligence on the company, decide on evaluation and Pitch the IPO to prospective investors. The Investment Bank may also advise a company on their corporate strategy. On June 30th, 2021 DD ipo'd on the New York Stock Exchange an initial price of 14 per share by all accounts, the IPO was a success. They raised 4.4 billion dollars at a valuation of 70 billion dollars, making it the largest Chinese IPO since Alibaba's IPO in 2014.

U.S Investors were excited to buy a piece of China's dominant ride-hailing company, which was also making advances in autonomous driving, but the optimism was short-lived just two days after the IPO China's Internet Regulatory Agency ordered DD's mobile app to be banned on all app stores within the country. While people who already downloaded the DD app could continue using the service, the App Store ban eliminated any potential growth opportunities for the company and share price declined by 90 over the following months. So why did the government decide to crush TD right after its IPO DD has over 300 million active users in China As a ride-hailing company, they have access to data about where their passengers are driving to. According to the Chinese Regulators, they were not following the appropriate procedures to protect their users location data.

In January of 2023, almost two years after being taken down, Chinese authorities finally allowed DD's app back onto the app stores and this was only after DD paid a record 1.2 billion dollar fine and agreed to completely overhaul its data privacy policies. While the DD situation was eventually resolved, the 1.2 billion dollar fine an almost two year long App Store ban seemed disproportionately severe. This raises two questions: Firstly, why did the Chinese government crack down so hard against Ede and secondly, what does this have to do with China Renaissance and The Disappearance Of their CEO Foreign reason the Chinese authorities were so concerned with Didi was the fact that iPod on the New York Stock Exchange. Because of this, U.S Regulators would potentially be able to request access to sensitive data which could raise National Security concerns for China.

While it seems far-fetched, you could imagine some scenario where high-ranking Chinese government official wrote in a DD car and this information could somehow be shared with U.S Auditors In 2021, China banned Tesla cars from the parking lots of many government buildings because Tesla cars have cameras on them if they really are paranoid enough to ban Teslas It makes sense that they would also be concerned about Dede's geolocation data. Where it gets really interesting is that Chinese Regulators had contacted Dede during the IPO process weeks before the company ultimately went public. They warned Dede about the data security problems and advise them to delay the IPO according to a Wall Street Journal report. Dede ignored the warnings of regulators and went forward with the IPO anyway, reportedly due to pressure from their investors and who was advising DD at the time, none other than China Renaissance Led by Balfan.

After the IPO Chinese Regulators wasted no time crushing DD with disproportionate restrictions and fines, they were trying to make a statement that if you fail to adhere to our warnings, there will be hell to pay foreign to February 2023 China Renaissance Founder and CEO disappears without warning. ten days after his disappearance, it's reported that he is cooperating with the authorities. We do not have any details about the nature of the investigation or whether or not Balfan has been arrested The Disappearance of Belfan almost immediately. Drew Similarities to Jack Ma, the founder of Alibaba and previously richest man in China.

Throughout the 2010s, he was idolized as one of China's leading entrepreneurs, making frequent public appearances and even starring in his own Kung Fu movie in October of 2020, He made a speech criticizing the Chinese government for stifling Innovation with excessive regulations. Shortly after the speech, mod disappeared for three months without explanation. Eventually, Ma did reappear, showing up at an event hosted by his charity Foundation but ever since then, his public profile has diminished significantly and he rarely gives interviews or other public appearances. In addition to being the founder of Alibaba Jack Ma also found and group one of the largest financial institutions in China and group operates the Alipay mobile payment app, which is over 1 billion users.

In addition to providing mobile payments, Alipay also offers wealth management products and Consumer loans and was planning to IPO in the Hong Kong's talk Exchange in November of 2020 for an estimated 300 billion valuation. However, right before the IPO was scheduled to happen, Chinese Financial Regulators swooped in and halted it. They claimed that Ant Group was operating as an unlicensed bank and pose serious risks to the country's Financial system. The Disappearance of Jack Ma and the Crackdown On and Group were almost certainly connected.

In his Infamous October of 2020 speech, Jack Ma specifically criticized China's Financial regulators and state-owned banks for stifling innovation. At the time of the speech, Ant Group was already preparing for its IPO The Regulators had almost certainly already raised concerns with the company in private. Jack Ma's speech criticizing The Regulators was likely in response to what he viewed as onerous regulatory oversight of Ant Crew. While this is speculation the Chinese government was probably Furious about Jack Ma trying to use his public Cloud to influence regulation of his own company, somebody from the Communist Party probably had a Stern talk with Ma telling him that as public Antics were getting out of control and that he'd be wise to lay low for the next few months while the regulatory process played itself out.

and that's exactly what ended up happening. While there are striking similarities between The Disappearance of Balfan and Jack Ma, there are also some key differences. While Balfan is an influential businessman within China, he has nothing near the stature of Jack Ma. for the most part.

He keeps a relatively low profile, rarely giving public appearances. Also, we don't know why he disappeared. The Chinese government has thus far not published any information about what investigation they launched into his company. China Renaissance's involvement in the DD IPO just seems to be the most likely reason at this point.

It's still too early to say for sure what is the reason behind Bell fans disappearance laughs Over the past few months: U.S Listed Chinese technology stocks have almost doubled in value. Part of this is due to the ending of the Zero Covid policies, but the rally has primarily been in response to indications that the government's Crackdown against the private sector is finally easing. Bearish sentiment around Chinese Stocks has been heightened since then. U.S President Donald Trump signed the Holding Foreign Company's Accountable Act in 2020 which threatened the de-listing of all U.S listed Chinese stocks.

This is because the Chinese government didn't allow Chinese companies to be audited by U.S Regulators In the summer of 2021, the U.S and China finally came to an agreement whereby China would allow U.S Regulators to audit Chinese companies for the first time ever. And sure enough, in December of that year, the US's public Company Accounting Oversight board confirmed that China had indeed given them full access to the accounts of U.S listed Chinese companies. A month later, a high-ranking Chinese government official publicly say that the regulatory Crackdown against the technology sector was finally over. All of this was enough to catalyze among Monster Rally in U.S listed Chinese stocks.

However, the latest incident with China Renaissance has casted real doubt as to whether or not the Crackdown is actually over. As outside observers, we don't know for sure what the Chinese government is planning, but for a couple reasons: I am cautiously optimistic that the Crackdown has in fact come to an end. This seems highly likely that the China Renaissance Crackdown is related to the DD IPO which happened more than a year ago. Thus, the action against Palfan appears like it focused on finishing up a previous Crackdown not starting up a new one.

Also, while China instituted a severe Crackdown against the technology, private education, and video game Industries in 2021, they have not initiated any significant new crackdowns in 2022. This lends Credence There claim that the crackdowns are finally over. So while The Disappearance of Balfan is concerning on balance, it does appear that China is moving away from the Crackdown policies which have been so disastrous for their stock market over the past two years. Alright guys, that wraps it up for this video.

what do you think about the China Renaissance situation? Let us know in the comments section below. As always, thank you so much for watching and we'll see you in the next one. Wall Street Millennial Signing out.