The Communist Dotcom Bubble Is a Dead Giveaway
The more China’s tech companies pledge to dole out to the government’s favored social causes, the more the stock market says they’re worth.
Can shareholders be prosperous if companies aren’t?
Photographer: Bloomberg
Call it the Communist dotcom bubble. Pinduoduo Inc. shares surged 22% in the U.S. on Tuesday after it became the latest Chinese technology giant to pledge a big donation to social aid, as the country’s corporate leaders respond to President Xi Jinping’s drive for “common prosperity.” These days, it seems, the more Chinese internet companies give away, the more they’re worth.
Pinduoduo’s bounce followed a revival in shares of Hong Kong-listed Tencent Holdings Ltd., China’s most valuable tech company, which said Aug. 19 that it would donate another 50 billion yuan ($7.7 billion) to aid the government’s wealth redistribution efforts, doubling the amount it’s setting aside for social responsibility programs. Tencent added $67 billion in market capitalization since then, climbing more than 12% after four straight days of gains (as of Wednesday’s close).