On Friday, Chinese regulators fined Ant Group nearly $1 billion, lifting shares in
which owns a third of the fintech. The sanction brings short-term pain, but hints at a brighter future for the entire Chinese tech sector.
Shares of Hong Kong-listed Alibaba (ticker: BABA) gained as much as 6.4% on Friday after Reuters reported the sanction was imminent. The U.S.-listed stock recently rose 5.8% in New York after China’s central bank and the country’s securities regulator confirmed the 7.123 billion yuan ($990 billion) fine. dollars) for Ant Group, one of the largest ever inflicted on a Chinese technology company.
Regulators said part of the fine included confiscation of illegal income, based on a statement released in Chinese and translated with software by Barrons. Authorities alleged, among other things, that Ant had breached rules in its banking, insurance, payment and settlement businesses in the past, and had issues with corporate governance and anti-corruption obligations. money laundering, according to the release.
While such a fine for Ant Group bites, it bodes well for the company, as well as for Alibaba and its tech peers such as
(JD), as it signals that nearly three years of regulatory pressure on the industry are coming to an end.
Chinese authorities began a brutal crackdown on the country’s fast-growing tech sector at the end of 2020 by scuttling Ant’s highly anticipated initial public offering – a move that sparked a stock market rout, which wiped out billions of dollars value of Chinese technology stocks.
The regulators Ant penalty should pave the way for the group to move forward and perhaps even go public.
It’s another symbolic development from Beijing that the tech sector is free to continue its streak of meteoric growth, but now in a macro environment in which the world’s second-largest economy is facing a slowdown. That should lift some of the excess in Alibaba shares, which have lost nearly half their value in 2021 alone and 2023 are trading less than a third of their 2020 peak.
Write to Jack Denton at email@example.com