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A takeover offer from financial services and payments giant Square Inc (NYSE: SQ) has sent the Afterpay Ltd (ASX: APT) share price 22% higher to $118 on Monday.

In good news for shareholders, it looks like the M&A activity has brought life back into the buy now, pay later sector, with gains across the board.

BNPL sector running hot on Monday

2021 has been a tough year for the BNPL sector following an onslaught of new competitors, margin pressures and headwinds for the tech sector.

Before today’s surge, the Afterpay share price was down about 18.7% year to date.

Other large-cap BNPL shares such as Zip Co Ltd (ASX: Z1P) and Sezzle Inc (ASX: SZL) have largely gone nowhere since February.

While smaller players, including Openpay Group Ltd (ASX: OPY) and Splitit Payments Ltd (ASX: SPT), have tumbled more than 50% in the last 12 months.

Encouragingly, the BNPL sector is posting some strong gains on Monday following the jump in the Afterpay share price.

On the larger end of town, Zip and Sezzle shares are trading 8.73% and 3.19% higher, respectively.

If Square successfully acquires Afterpay, Zip might rise to the occasion as the top ASX-listed BNPL stock.

Smaller, beaten up BNPL shares, including Openpay, Splitit, Laybuy Holdings Ltd (ASX: LBY) and Humm Group Ltd (ASX: HUM), are also enjoying some gains, up 2.65%, 8.7%, 5.81% and 3.21%, respectively.

Why the Afterpay share price might be driving the BNPL sector higher

Square’s takeover offer will see Afterpay shareholders receive a fixed 0.375 shares of Square Class A common stock for each Afterpay share they hold on the record date.

This values the Afterpay share price at approximately $126.21 based on Square’s closing price of US$247.26 last Friday. Or a 30.6% premium to Afterpay’s last closing price of $96.66 on Friday.

A BNPL acquisition of this scale is the first of its kind, with Square willing to front up $30 billion (in shares) to acquire a company trading at around 30 times FY21 revenue.

The broader ASX-listed BNPL sector is likely pleased to see frontrunner Afterpay potentially getting taken over at a significant premium.

The post Surging Afterpay (ASX:APT) share price reinvigorates BNPL sector appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Afterpay to be acquired by Square, Oil Search to merge with Santos
• What is the outlook for the Afterpay (ASX:APT) share price?
• Who is Jack Dorsey and why is he buying Afterpay (ASX:APT)?
• The Square (NYSE:SQ) share price has gained 80% over the last year
• Here’s why ASX tech shares are up 6% on Monday

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Lake Resources N.L. (ASX: LKE) share price is soaring on the back of the company’s fourth quarter report.

Lake Resources released its quarterly activities and cash flow report after the market closed on Friday. Today’s session is the first chance the market has had to react to the report and it’s seemingly thrilled.

The Lake Resources share price is currently trading at 53 cents, up 13.98%.

Let’s take a look at what the lithium explorer was up to over the 3 months ended 30 June.

Lake share price gaining on Q4 report

Lake Resources’ shares are gaining after the company released news of a successful quarter’s work.

Financial

The Lake Resources share price is up on the back of its quarterly financial report.

Within the report, the company announced it spent around $1.02 million on staffing, administration, and corporate costs over the fourth quarter. It also spent $1.68 million in exploration and development.

The company stated it financed through to the final investment decision and construction finance phase of the Kachi Lithium Project.

Over the quarter, listed 10 cent options, set to expire in June, were converted with an uptake of 93% – raising around $3.9 million.

Lake Resources ended the quarter with $26 million in the bank and no debt.

That’s enough cash to fund the company for another 75 quarters in which its activities are the same as the quarter just been.

Activities

The Lake Resources share price is gaining after its busy fourth quarter.

Over the final stint of the 2021 financial year, Lake Resources received interest from more than 6 major international banks looking to help fund the company’s Kachi Lithium Project.

Any funding decision is conditional upon the project receiving support from Export Credit Agencies.

The company also refreshed its pre-feasibility study (PFS) based on increased lithium prices, pushing the project’s value up to US$1.6 billion.

The company expects the project’s definitive feasibility study to be completed in the current quarter.

Additionally, the company says its received more interest in Kachi’s lithium products since they were found to be of exceptional quality with a low carbon footprint.

Lake Resources share price snapshot

Today’s gains have added to Lake Resources’ fantastic year on the ASX.

Right now, the Lake Resources share price is 563% higher than it was at the start of 2021. It has also gained a whopping 1,225% since this time last year.

The company has a market capitalisation of around $493 million, with approximately 1 billion shares outstanding.

The post The Lake Resources (ASX:LKE) share price is soaring 14% appeared first on The Motley Fool Australia.

More reading

• Here’s why the Lake Resources (ASX:LKE) share price is charging 5% higher
• Why the Lake Resources (ASX:LKE) share price is storming higher

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Magnis Energy Technologies Ltd (ASX: MNS) share price has been frozen for almost a week.

Despite releasing its quarterly activities report late last week, shares in the lithium-ion battery manufacturer remain in a trading halt. The Magnis share price last traded on Tuesday last week at 27 cents.

Let’s look at how Magnis performed last quarter and the status of the company’s voluntary suspension.

Magnis share price unmoved on quarterly report

Magnis released its quarterly activities report to the market after the close of Friday’s trading session.

For the quarter ending 30 June 2021, the company highlighted production at its New York plant.

Magnis was able to produce its first full-sized prismatic cells using commercial grade components last quarter. As a result, the company expects to be on track for customer sampling in the third quarter of 2021.

The company also noted the US$85 million funding package for its New York plant. According to Magnis, the funding has allowed for the acquisition of new equipment to increase the battery plant’s annual capacity to 1.8GWh.

Magnis also highlighted the progress made with its technology partner Charge CCCV (C4V).  It has a 9.65% stake in C4V, which specialises in the accelerated charging of lithium-ion batteries.

Suspension and transaction update

In addition to its quarterly report, Magnis also provided an update on its voluntary suspension.

The company noted that securities in Magnis would remain in suspension until the release of its announcement regarding the proposed capital raising transaction.

Magnis noted that the announcement would be published by today. However, the company has yet to release an update.

Shares in the lithium-ion battery producer have been in a trading halt since last Tuesday.

Magnis initially expected its shares to come out of the freeze last Thursday. However, the company chose to extend the exclusion of its securities, requesting a voluntary suspension late last week.

The company cited the inability to finalise the outcome of its proposed capital raise.

Magnis has not provided further information on how much the company is looking to raise or where funds will be directed.

According to the Australian Financial Review‘s Street Talk column, Magnis is expected to reveal it has secured $20 million via a convertible note issue.

The post The Magnis (ASX:MNS) share price freeze continues, quarterly update released appeared first on The Motley Fool Australia.

More reading

• Magnis Energy (ASX:MNS) share price remains in trading halt
• Here’s why the Magnis (ASX:MNS) share price is halted

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Fortescue Metals Group Limited (ASX: FMG) share price is coming under pressure today. This is despite the iron ore mining outfit providing a robust June quarterly performance last week.

At the time of writing, Fortescue shares are fetching $24.37, down 2.17%. In comparison, the S&P/ASX 200 Index (ASX: XJO) is sitting at 7,497 points, up 1.4%.

What did Fortescue report?

Investors appear to be profit-taking after Fortescue shares hit an all-time high of $26.58 last Thursday.

The world 4th largest miner delivered record iron ore shipments of 49.3 million tonnes (mt) for the 3 months ending 30 June. This resulted in the company achieving 182.2mt for FY21, exceeding its guidance of 182mt.

Furthermore, Fortescue reported a record average revenue of US$168 per dry metric tonne (dmt) for the Q4 period. The strong iron ore price over the last year has resulted in the company averaging US$135/dmt for FY21.

C1 costs increased to US$15.23 per wet metric tonne (wmt), up 2% attributed to COVID-19 related expenses and inflationary impacts. For the year (FY21), C1 costs came to US$13.93/wmt, which was in line with the previous guidance.

Cash on hand stood at US$6.9 billion, with net cash of US$2.7 billion. Gross debt was reduced to US$4.3 billion due to the completion of the refinancing of the senior unsecured notes.

What do the brokers think?

After releasing its fourth-quarter results, a number of brokers rated the company with varying price points.

American multination investment bank, Morgan Stanley cut its price target for Fortescue by 0.5% to $18.55. Credit Suisse followed suit to also reduce their rating by 4.3% to $22.

The most recent broker note came from Goldman Sachs last week, which has initiated a price of $19.90 for the iron ore miner. This implies a downside of about 20% on the current Fortescue share price.

Fortescue share price snapshot

Regardless of Fortescue shares being lower today, over the last 12 months, its shares have rocketed 40% higher. When looking further back, the company’s share price is up roughly 430% from this time 5 years ago.

Based on valuation metrics, Fortescue presides a market capitalisation of approximately $75.1 billion.

The post The Fortescue (ASX:FMG) share price is falling on Monday appeared first on The Motley Fool Australia.

More reading

• Why Fortescue, Over The Wire, Pro Medicus, & Whispir shares are dropping
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• 5 things to watch on the ASX 200 on Monday
• How China’s war on tech companies can hit ASX shares where it hurts
• Fortescue (ASX:FMG) share price falls as iron ore drops below US$200/tonne

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Macquarie Group Ltd (ASX: MQG) share price is underperforming the S&P/ASX 200 Index (ASX: XJO) in today’s trading session. At the time of writing, shares in Macquarie are trading for $158.22 – up 0.84%. While this is in the green, the ASX 200 is up a monstrous 1.41%.

One reason the financial giant may be underperforming is due to a damning speech against the company in federal parliament.

Let’s take a closer look at today’s news.

Macquarie’s role in the Nuix IPO

In a speech to the Australian Senate, NSW Senator Deb O’Neill slammed Macquarie Group for its role in the IPO of scandal-riddled Nuix Ltd (ASX: NXL).

Senator O’Neill pushed back against Macquarie’s claims it could not disclose its role in the Nuix IPO.

“While I respect Macquarie wanting to maintain confidentiality and legal professional privilege, I am concerned that there is a misunderstanding of the role of parliament to get to the truth of matters that impact Australians,” she is quoted as saying in The Australian newspaper.

The senator goes on to say Nuix’s continued profit downgrades, which totalled $3 billion in lost income, “is a bigger concern to me as a Senator than the legal privilege and confidentiality for a bank”.

This added scrutiny and uncertainty may be hampering Macquarie’s share price today.

Macquarie has previously said it “found no signs of wrongdoing” over the Nuix IPO in which the bank was materially involved. In fact, Macquarie still owns a 30% stake in the technology sector company.

This hasn’t stopped the corporate regulator, ASIC, from continuing its investigation into the company’s IPO. The chair of ASIC recently had to remove herself from the investigation over potential conflicts of interest. This action was taken after Senator O’Neill raised questions.

Macquarie share price snapshot

Over the past 12 months, the Macquarie share price has increased 29.4%. Year-to-date shareholders have seen a 12.7% return on investment in the company. The current share price is only just under its 52-week high of $162.06 per share.

Macquarie Group has a market capitalisation of around $58.2 billion.

The post Macquarie (ASX:MQG) share price underwhelms as Senator fires up on Nuix appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• These were the worst performing ASX 200 shares last week
• Brokers name 3 ASX shares to buy today
• Macquarie (ASX:MQG) share price edges lower after signalling dividend cut
• ASX 200 rises, Fortescue up, Airtasker climbs

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In early afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a strong gain. At the time of writing, the benchmark index is up 1.3% to 7,488.7 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price is down almost 2.5% to $24.32. This follows a sharp pullback in the spot iron ore price on Friday. According to CommSec, the benchmark iron ore price dropped 7.4% to US$180.50 a tonne. This meant the iron ore price lost almost 11% of its value over the week. Concerns over a crackdown on steel production in China weighed on prices.

Over The Wire Holdings Ltd (ASX: OTW)

The Over The Wire share price is down 1.5% to $4.50. Investors have been selling the telecommunications, cloud and IT solutions provider’s shares after it announced the surprise resignation of the CEO of its Over The Wire business, Scott Smith. This was only a little over a year after Mr Smith commenced in the role. The company does not intend to replace him.

Pro Medicus Limited (ASX: PME)

The Pro Medicus share price has fallen 4% to $55.75. Investors have been selling the health imaging technology company’s shares after it was the subject of a broker note out of Goldman Sachs. According to the note, the broker has downgraded the company’s shares to a neutral rating with a $55.60 price target. Goldman Sachs made the move on valuation grounds after a strong period of share price performance.

Whispir Ltd (ASX: WSP)

The Whispir share price has continued its decline and is down a further 4.5% to a 52-week low of $2.37. The cloud-based communication platform provider’s shares have come under pressure since the release of a trading update on Friday. That update revealed a 6.6% quarter on quarter increase in its annualised recurring revenue (ARR) to $53.6 million. Whispir advised that a resurgence of COVID-19 has resulted in a delay in new customer activations.

The post Why Fortescue, Over The Wire, Pro Medicus, & Whispir shares are dropping appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Afterpay to be acquired by Square, Oil Search to merge with Santos
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• 5 things to watch on the ASX 200 on Monday
• How China’s war on tech companies can hit ASX shares where it hurts
• Fortescue (ASX:FMG) share price falls as iron ore drops below US$200/tonne

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Over The Wire Holdings Ltd, Pro Medicus Ltd., and Whispir Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Over The Wire Holdings Ltd and Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Splitit Payments Ltd (ASX: SPT) share price has leapt into the green from market open today, hitting an intraday high of 52 cents.

There is no market sensitive news specific to Splitit today, so let’s have a look at what is behind today’s gains.

Fintech shares lift from Afterpay deal

US payments giant Square agreed to a pending proposal to buy payment services company Afterpay Ltd (ASX: APT) for $39 billion in an all-stock transaction today.

Afterpay shares soared on the news, bringing companies in the Australian payments services basket along for the ride.

This is not an uncommon phenomenon when there is a large deal like this on the table. The reason is that investors have a reasonable anchor point to put a valuation on companies in the same industry.

Splitit Payments is a “cross-border payment solution” that enables its customers to split purchases into monthly instalments.

Therefore it stands to reason that Splitit shares fall in the peer group of Afterpay, and are realising gains on the back of this momentum.

And Splitit shares are not the only benefactors to the momentum created by the Afterpay deal.

Other names in the Fintech domain like Zip Co Ltd (ASX: Z1P) climbed 15% higher from the open at one point, whereas IOUPay Ltd (ASX: IOU) also jumped 10%.

Splitit Payments share price snapshot

The Splitit Payments share price has had a difficult year to date, posting a loss of 62% since January 1.

This loss extends the previous 12 month’s decline of 64%, which has lagged the S&P / ASX 200 Index (ASX: XJO)’s return of around 23% over the same time.

In the past month alone, Splitit shares have slipped 20% into the red.

The post Why the Splitit (ASX:SPT) share price is surging 7% today appeared first on The Motley Fool Australia.

More reading

• Splitit (ASX: SPT) share price wobbles after business update
• How has the Afterpay (ASX:APT) share price responded to competition in the past?
• Why isn’t the Splitit (ASX:SPT) share price tumbling as much as other BNPL shares?
• BNPL ASX share prices tumble as PayPal declares no BNPL late fees
• Why the Splitit (ASX:SPT) share price is pushing higher today

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Oil Search Ltd (ASX: OSH) share price is starting the week off with a bang today. This comes after the oil and gas company received a revised takeover bid by fellow energy producer Santos Ltd (ASX: STO).

At the time of writing, Oil Search shares are exchanging hands for $4.02, up 5.51%.

Oil Search receives higher offer

Following the company’s latest update to the ASX, investors are fighting to get hold of Oil Search shares.

According to the release, Oil Search advised it has received an improved non-binding indicative merger proposal from Santos.

Under the new offer, Santos put forward a deal to acquire all of Oil Search’s shares. The transaction implies a consideration of 0.6275 new Santos shares for every Oil Search share held.

This is superior to last month’s proposal, in which Oil Search was offered 0.589 of Santos shares for each Oil Search share owned. The Oil Search board unanimously rejected this.

Under the revised bid, Oil Search shareholders would hold an approximate 38.5% stake of the merged group. Santos shareholders will retain the remaining 61.5% interest.

The renewed proposal translates a transaction price of $4.52 per Oil Search share. This is based on the closing price of Santos shares on 24 June (the day before submission of the first proposal). Compared to that date, a 19.7% premium applies to the last closing price of Oil Search shares.

What’s next for the agreement to proceed?

Both parties will conduct due diligence on each other, subject to a confidentiality agreement. This will enable Oil Search and Santos to do their research and ensure the proposed merger is feasible. This process will take around four weeks to complete.

If this is successful, the Oil Search board recommends its shareholders to vote in favour of the revised proposal. It notes that the merged group will become the ASX’s largest oil and gas company and top 20 global player. In essence, this would give the super-company a diversified portfolio of long-life and low-cost assets with significant growth options.

Oil Search share price snapshot

Over the last 12 months, Oil Search shares have accelerated to post a gain of almost 38%. Year to date, however, the company’s share price is tracking just 8% higher.

Oil Search presides a market capitalisation of roughly $7.92 billion.

The post Why the Oil Search (ASX:OSH) share price is roaring 5% higher today appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Afterpay to be acquired by Square, Oil Search to merge with Santos
• Oil Search (ASX:OSH) share price struggles despite rising oil price
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• Own Santos (ASX:STO) shares? What to look out for this reporting season

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Zip Co Ltd (ASX: Z1P) share price is riding a revival in the buy now, pay later (BNPL) space today. This comes after Afterpay Ltd (ASX: APT) announced the receipt of a $39 billion takeover bid from US payments giant Square Inc.

At the time of writing, shares in Zip are trading 8.4% higher to $7.20. The sizeable bid for Australia’s biggest BNPL player has injected optimism back into the sector on Monday.

Let’s take a look at the latest developments.

Afterpay acquisition

This morning, Afterpay announced to the market that US-based Square will acquire it for $39 billion in an all-scrip deal. That means Afterpay shareholders will receive 0.375 shares in Square if the deal goes through.

The monumental deal has revitalised investor interest in the sector, with shares in other ASX-listed BNPL companies climbing. One notable company experiencing a significant lift in its share price is Aussie competitor Zip.

Today’s attention to Zip might be due to its own acquisition rumours last month. According to reports, Swedish BNPL leader Klarna took a 4% strategic stake in the company. However, this has not been confirmed by either entity.

Following Afterpay’s acquisition news, investors might be speculating over the possibility of Zip being the next gobbled-up competitor.

Zip share price in focus

Expectations of consolidation have come with increased competition in the industry. For example, rumours arose last month of US tech behemoth Apple planning to enter the fray. Similarly, PayPal has been pushing its instalment payment offering in Australia.

For context, these are not small companies. Apple is the biggest publically-listed company in the world with a market capitalisation of US$2.41 trillion. Likewise, Paypal commands a US$323.7 billion valuation. Understandably, with such giants ramping up competition, their smaller competitors are looking for partnerships to make them more formidable.

Based on its current share price, Zip’s market capitalisation is $4.01 billion.

The post Zip (ASX:Z1P) share price surges on news of Square acquiring Afterpay appeared first on The Motley Fool Australia.

More reading

• Here’s why ASX tech shares are up 6% on Monday
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• Why did the Zip (ASX:Z1P) share price tumble 12% in July?
• Why Afterpay, Redbubble, & Zip shares are sinking on Friday
• Own Zip (ASX:Z1P) shares? Here’s what to look for during reporting season

Motley Fool contributor Mitchell Lawler owns shares of AFTERPAY T FPO and Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Apple, PayPal Holdings, Square, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Apple and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The BetaShares Asia Technology Tigers ETF (ASX: ASIA) is gaining in intraday trade but remains down 10% since this time last month.

The exchange traded fund is weighted towards tech shares and is intended to track the performance of the Solactive Asia ex-Japan Technology & Internet Tigers Index.

Its top holdings include tech giants such as Tencent Holdings Ltd (HKG: 0700), Alibaba Group Holdings Ltd (NYSE: BABA) and Taiwan Semiconductor Manufacturing Mfg. Co. Ltd. (NYSE: TSM).

As you may expect, the ASIA ETF share price was a stellar performer following the COVID-19 driven market lows in early 2020. As the tech sector in general boomed, over the 11 months from 20 March 2020 through to 12 February 2021, the ASIA ETF share price gained 102%.

Since 12 February, the ETF has lost 27%. And it’s remained under pressure over the past month.

Why is the ASIA ETF share price under pressure?

The ASIA ETF share price has been struggling alongside China’s wider stock market. Over the past month China’s CSI 300 Index is down 5.3%. By comparison the S&P/ASX 200 Index (ASX: XJO) is up 2.7% in that same time.

So what’s been hampering the ASIA ETF share price?

Most fingers point in the direction of Chinese President Xi Jinping.

The leader of the world’s most populous country and second largest economy has been rattling investor’s nerves with a series of high-profile government interventions into the markets.

This follows the very public rebuke of billionaire and Alibaba founder Jack Ma last year. In November 2020, China’s government moved to prevent the initial public offering (IPO) of Ma’s Ant Group, which had been billed as the biggest IPO in history.

In June this year, the Chinese government turned its regulatory attentions to the education and tech sectors, cracking down on the US$100 billion after-school private tutoring sector. As Bloomberg reports, the government said private education had been “hijacked by capital“. It ordered them to become non-profit organisations.

This move came along with “new requirements for data security reviews ahead of overseas IPOs, directives for food-delivery firms to pay staff a living wage and escalating curbs on unaffordable housing”.

Investors tend to steer clear of uncertainty

The raft of new government red tape has left investors uneasily eyeing the future. And its clearly put pressure on the ASIA ETF share price.

According to Liao Ming, Beijing-based founder of Prospect Avenue Capital, “This marks a watershed shift in China’s policy priorities. The government is going after industries that are creating the most social discontent.”

Chinese ridesharing company DiDi Global Inc (NYSE: DIDI) was also hit by new regulations last month. This, after the government said technology companies with more than 1 million users now needed to pass a security review before they can list overseas.

According to Bloomberg:

Regulators made an example of Didi Global Inc — China’s answer to Uber — which had squeaked through a U.S. IPO just before the new regulations, removing it from app stores in the country and hammering its valuation.

Free markets don’t like unexpected regulations.

And investors don’t like the added risks that come with uncertainty.

It’s unclear how far Xi Jinping’s government will continue with its regulatory clampdowns. And so long as that remains the case, the ASIA ETF share price may continue to face new headwinds.

The post Here’s why the BetaShares Asia ETF (ASX:ASIA) share price is down 10% over a month appeared first on The Motley Fool Australia.

More reading

• 2 ASX tech shares that might be buys in August 2021
• What’s gone wrong with China shares like Tencent lately?
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• 2 highly rated ETFs for ASX investors

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alibaba Group Holding Ltd. and Baidu. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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