SINGAPORE – Increasing regulatory control of Alibaba-affiliated Ant Group and financial technology could be bad for the Chinese economy as well as China’s financial technology sector, says Andrew Collier, CEO of Orient Capital Research.
The long-awaited list of Chinese technology giant Ant Group – which was supposed to be the largest initial public offering in the world – was abruptly suspended in November.
It came shortly after Jack Ma’s Ant controller and other company executives were interviewed by Chinese authorities over regulatory concerns.
“It’s true that when Jack Ma gave his terrible speech … which annoyed a lot of older politicians, I thought it was going to be kind of a unique thing,” Collier said Tuesday for Squawk Box Asia from CNBC.
He was referring to the speech of the Chinese billionaire at the end of October, where he seems to have criticized the regulators during a controversial speech. Ma is the founder of Chinese e-commerce giant Alibaba, which owns about 33% of the Ant Group.
Days later, Ant’s double listing, both in Shanghai and Hong Kong, was abruptly suspended, sending Alibaba shares.
“Clearly, this was an excuse for the management and probably the state-owned banks to counter the entire fintech sector …” Collier said. “Part of that is legitimate because of concerns, you know, about the possibility … of a financial crisis. But they’ve already cut Ant Financial’s wings in pretty serious ways.”
It is not good for the future of fintech or for the future of the Chinese economy
Andrew Collier
General Manager, Orient Capital Research
The problems for both Alibaba and Ant have only increased since then, with Chinese authorities announcing an anti-monopoly investigation into the e-commerce titanium last week. Chinese regulators also recently ordered the Ant Group to rectify its business.
These developments have resulted in a further decline in Alibaba’s Hong Kong-listed shares – with over $ 831 billion in Hong Kong (approximately $ 107 billion) in its market capitalization, it was eliminated in just two sessions. based on CNBC calculations.
Collier said regulatory control around Ant is likely both centered around the desire to protect the Chinese consumer as well as politics.
“Initially I thought a bit that the line (People’s Bank of China) is trying to protect the consumer,” the analyst said, citing past challenges in the peer-to-peer lending space.
“Now, since they are becoming so serious and coming up with new accusations and telling them to reduce large business areas, it is clear that it is partly a political goal to reduce the size of these companies so that they do not have significant market share. and threatens the existence of the state system, “he added.
“It’s not good for the future of fintech or the future of the Chinese economy,” Collier said.