The shares of Alibaba, an e-commerce group founded by Jack Ma, fell sharply after Beijing publicly accused its arm of payments of regulatory failures in its latest onslaught against one of China’s richest men.
Comments by Pan Gongsheng, deputy governor of the People’s Bank of China, were posted on the central bank’s website on Sunday and came at a time when the country’s authorities increased pressure on Ma’s business empire.
Alibaba’s shares plunged up to 7.3% at the start of trading in Hong Kong, reaching its lowest level since July. The PBoC rebuke overshadowed an initiative by Alibaba on Monday to increase its two-year share buyback program from $ 6 billion to $ 10 billion.
The company’s shares have fallen more than 25% – taking about $ 260 billion from Alibaba’s market capitalization – since the end of October, when Ma publicly criticized the country’s financial regulators and state banks. Ma’s personal fortune, once China’s richest person, fell from just under $ 62 billion to $ 49.3 billion, according to Bloomberg data.
$ 300 billion
Ant Group’s proposed minimum rating before its IPO destroyed
Beijing also suspended an initial public offering of $ 37 billion from Ant Group, Alibaba’s online finance unit, following Ma’s comments. This triggered a cascade of public, state media and government criticism of the company’s alleged monopoly practices. two companies.
China’s market regulator announced last week that it would launch an antitrust investigation into Alibaba, while Ant confirmed that he had been summoned to a meeting with the PBoC and three other regulators.
Pan’s comments, posted a day after PBoC and Ant representatives met in Beijing, redirected investors’ attention to the financial services group. Ant had been trying to restructure its business in an attempt to relaunch its IPO next year.
Pan’s attack, however, confirmed how difficult a task will be. He said that Ant would have to “return to its origins” as a payment service provider and “rectify” many of its fastest-growing and most profitable consumer credit and equity management operations. Ant started this process in the past few weeks, but investors predict that it could affect the company’s valuation if it manages to return to the market.
Ant’s IPO would have been the largest in the world and would have valued the company at more than $ 300 billion.
Analysts are unsure whether a restructuring will satisfy regulators or whether Ant will have to sell or close some of its consumer credit operations. The latter drew strong criticism from state-owned banks, which argue that Ant benefited from looser regulatory oversight.
The parallel movement against Alibaba, which is listed in Hong Kong and New York, further increased the stakes for Ma, who founded the group more than two decades ago in Hangzhou, the capital of eastern China’s Zhejiang province.
After the State Market Regulation Administration revealed its investigation into Alibaba on December 24, Zhejiang officials confirmed that they interviewed company employees and picked up materials from the group’s headquarters. Zheng Shanjie, the governor of Zhejiang, said on Friday that the investigation was not intended to usher in “winter” for online businesses, but rather to mark a new “starting point” for the sector’s development.
Additional reporting by Xinning Liu and Ryan McMorrow in Beijing