$Alibaba(BABA.US)2021 was the most brutal year in the history of Chinese concept stocks, with an overall drawdown of about 85% for the year. Leading companies like Tencent and Alibaba fell 70-80%, and a large number of small companies lost over 90%.

1. The Launch of Anti-Monopoly Measures in the Platform Economy

After Jack Ma's speech at the Shanghai Financial Forum at the end of 2020, Ant Group's IPO was suspended at the last minute. In April 2021, Alibaba was fined 18.2 billion yuan for anti-monopoly violations; in October, Meituan was fined 3.4 billion yuan, marking a comprehensive tightening of platform economy regulation.

2. Deterioration of China-US Relations in March and Bill Hwang's Blow-up

On March 18, the intense diplomatic confrontation between China and the US in Anchorage was seen as a "showdown" in bilateral relations. On the evening of March 26, Bill Hwang, who was heavily leveraged in Chinese concept stocks, blew up, with his $15 billion in personal capital plus $70 billion in financing all hitting Chinese concept stocks, causing a collective bloodbath that night. Hwang ultimately lost all his assets and was sentenced to 18 years in prison.

3. The Didi Incident and the "Double Reduction" Policy in Education

At the end of June, Didi went public in the US without full approval and was subsequently removed from app stores due to data security reviews, triggering widespread market concern about compliance risks for Chinese concept stocks. After that, the channel for US listings was significantly tightened. On July 24, the "Double Reduction" policy was implemented, causing education and tutoring stocks to fall 50-70% that night. Foreign investors began to worry that regulatory risks would spread to other sectors, leading to panic selling of Chinese concept stocks.

4. New Gaming Addiction Rules and the Implementation of HFCAA

In August, new regulations on preventing minors from gaming addiction were introduced, leading Tencent, NetEase, and others to lower profit expectations. In December, the US "Holding Foreign Companies Accountable Act" (HFCAA) officially took effect, requiring listed companies in the US to submit audit working papers or face delisting. Chinese regulators, however, prohibited companies from submitting sensitive data to the US. A large number of Chinese concept stocks were placed on the "pre-delisting list," with over 100 at its peak. Foreign investors sold off heavily to avoid risk, erasing nearly a trillion dollars in market value from Chinese concept stocks.

Since then, foreign investors have realized that investing in Chinese concept stocks involves not only fundamental risks but also multiple unpredictable risks related to policy, regulation, and geopolitics, severely damaging confidence. Although there has been some recovery since, a large amount of capital has chosen to permanently withdraw or significantly reduce its allocation, resulting in the long-term valuation of Chinese concept stocks being significantly lower than that of comparable US tech stocks, creating a persistent "valuation discount." This history is key to understanding the current low valuation of Chinese concept stocks—the extreme experience of 2021 has led the market to label them as "high-risk," a psychological imprint that has not yet fully faded.