HONG KONG (Reuters) – China’s major tech companies have shed more than $1 trillion in value – equivalent to the entire Dutch economy – since the government’s regulatory crackdown on the sector began more than two years ago, according to Refinitiv data.

Investors are now hoping the strict rules that have stymied growth since late 2020 will start to ease, after the People’s Bank of China (PBOC) indicated a change in direction could be under way.

The central bank said on Friday most of the main problems for platform companies’ financial businesses had been rectified, and regulators would shift their focus to the industry as a whole rather than specific companies.

The state planner on Wednesday praised Tencent Holdings, the world’s largest video game company, and e-commerce titan Alibaba Group, for their contributions to China’s tech innovation, in another sign that authorities are warming to the technology sector once more.

Analysts pinpoint the shelving of Alibaba affiliate Ant Group’s $37 billion initial public offering (IPO) in November 2020 as the start of a sweeping regulatory crackdown on mainland China’s tech firms, which had grown rapidly in size and influence.

Since then, roughly $1.1tr has been wiped from the market capitalisation of the Hong Kong-listed stock of Alibaba Group, Tencent, Chinese food delivery giant Meituan, search engine provider Baidu Inc and e-commerce site JD.com.

Share prices for the five companies have plunged between 40.4 per cent and 71pc during that time.

Technology stocks in Hong Kong have rallied 4.1pc since Monday as investors bank on an easing regulatory environment to boost earnings, but some analysts have sounded a note of caution.

“Mega-cap tech companies will allocate increasingly large amounts of capital expenditure towards developing generative AI technologies and products in a hostile external environment, potentially impacting profitability,” said Redmond Wong, Saxo Markets strategist in Hong Kong.

Steven Leung, UOB Kay Hian sales director, said current valuations would last “until we see more supporting policies from authorities”.