Jack Ma, founder of Alibaba Group, during the opening ceremony of the 3rd China Youth Entrepreneurs Summit on September 25, 2020 in Fuzhou, Fujian province in China.
Lyu Ming | China news service | Getty Images
China announced new anti-monopoly rules over the weekend – but that shouldn’t have much of an impact on the market for now, according to a market observer.
“The new regulation is still, you know, slightly vague in detail,” Hao Hong, managing director and head of research at Bank of Communications International, told CNBC’s “Street Signs Asia” on Monday.
The State Administration of Market Regulation of China (SAMR) has tightened restrictions on China’s Internet giants such as Alibaba and Meituan, and introduced new guidelines on Sunday to curb monopoly behavior. The new rules formalize a draft released months earlier.
Still, development appeared to have little impact on the actions of China’s internet giants, with most of them still in positive territory on Monday afternoon in Hong Kong: Tencent rose 0.82%, Meituan rose 1, 54% and JD.com rose 1.14%. Only Alibaba resisted the trend, dropping around 0.16%.
Monday’s market movements contrasted sharply with the volatility seen in November, when the Hong Kong-listed stocks of China’s tech giants plummeted after the regulator’s initial announcement. Billions of dollars in market value were eliminated after the antitrust guidelines were first proposed.
Hong said the market needs time to digest the details of the latest anti-monopoly guidelines, adding that China’s Internet giants have been operating for years and already have “very solid” market positions.
“The regulation, you know, is starting with a very good intention,” said Hong. “The fact is that … the market position … of these large internet platforms is very difficult to invade for now.”
While Hong acknowledged that the new rules “will make it easier for minors to grow,” he also added that many of the big players on the Internet, like Alibaba and Tencent, also “put their own money into many of the Internet startups.”
Some notable examples of such investments include Alibaba’s participation in the financial technology giant Ant Group and Tencent’s support for the short video company Kuaishou, which had a strong investor interest on Friday during its public listing of $ 5 billion in Hong Kong.
The increase in scrutiny by Beijing comes at a time when the technology industry is in the regulatory spotlight around the world, with similar moves in the US and the European Union.
– CNBC’s Evelyn Cheng contributed to this report.