An Ant Group logo is displayed at the company’s Alibaba affiliate headquarters in Hangzhou, Zhejiang Province, China, October 29, 2020.
Aly Song | Reuters
GUANGZHOU, China – Alibaba shares in Hong Kong rose nearly 4% at the start on Tuesday after regulators ordered the e-commerce giant’s financial technology affiliate to renew its business.
That, along with a $ 18.23 billion ($ 2.78 billion) fine that Alibaba received as a result of an antitrust investigation by regulators, removed a source of uncertainty for investors.
“Following the decision and the penalties imposed by the anti-monopoly investigation of BABA’s SAMR (State Administration for Market Regulation), we believe that the street has more color in connection with the latest updates about Ant Group,” Jefferies said in a statement. a note published on Monday.
Alibaba’s Hong Kong-listed shares subsequently reduced their opening gains, but were last seen trading at almost 2% during Tuesday’s session. Alibaba’s US-listed shares closed up more than 9% on Monday.
Alibaba holds a 33% stake in Ant Group, the company that manages the popular mobile payment application Alipay in China. In November, regulators forced Ant Group to suspend what would have been a $ 34.5 billion initial public offering (IPO) in Hong Kong and Shanghai.
At the time, changes in the financial technology regulatory environment were accused of suspending listing.
It came just days after Jack Ma, the founder of Ant Group and Alibaba, made some comments that seemed critical of China’s financial regulator.
In December, the People’s Bank of China (PBOC) ordered Ant Group to rectify its operations. And on Monday, the Chinese central bank presented concrete details about what the company needs to do.
PBOC asked Ant Group to restructure into a financial holding company. Ant Group must also create a greater separation between its Alipay payment application and its credit products. Yu’e Bao, the money market fund of the Ant Group, which was once the largest in the world, must also be reduced in size, PBOC said.
Both Alibaba’s massive antitrust fine and Ant Group’s restructuring plan are part of a broader pressure from China to get a tighter squeeze on the country’s technology companies, which have become largely free giants. Their activities often span sectors, from gaming to financial technology, as well as cloud computing.
Although so far Beijing’s eyes have focused on Jack Ma’s empire, there are signs that the crackdown could spread to more companies and other areas, such as data protection.