Alibaba Shares up 2% as Beijing Orders Ant Group to Revamp

Alibaba shares in Hong Kong climbed 4% at the stock market’s open on Tuesday. This came after regulators ordered the Ant Group to revamp its business. The Ant Group is Alibaba’s financial technology affiliate. 

That, along with an 18.23 billion yuan ($2.78 billion) fine, removed investors’ source of uncertainty. The e-commerce company received the fine as a result of an anti-monopoly investigation by regulators.

During the Tuesday session, Hong Kong-listed shares of Alibaba were last trading up nearly 2% and later paired their opening gains. On Monday, Alibaba’s U.S.-listed shares closed over 9% higher.

The e-commerce firm owns roughly 33% stake in Ant Group. This company runs Alipay, a massively popular mobile payments app in China.

In a note published on Monday, Jefferies said they think the street has more color about the latest updates on Ant Group. This followed the decision and penalties levied by SAMR’s (State Administration for Market Regulation) anti-monopoly investigation of BABA. 

In November, regulators forced Ant Group to suspend what would have been a record-setting $34.5 billion initial public offerings (IPO). That was to be held in Hong Kong and Shanghai.

Changes in the Financial Technology Regulatory Environment

Changes in the financial technology regulatory environment were because of the suspension of the listing at the time. 

That was just days after Jack Ma made some comments that appeared critical of China’s financial regulator. Ma is the founder of Ant Group and Alibaba.

In December, the Chinese central bank ordered Ant Group to rectify its business. And on Monday, the People’s Bank of China (PBOC) outlined concrete details on what the company needs to do.

The PBOC asked Jack Ma’s Ant Group to restructure into a financial holding firm. Moreover, Ant Group must also create more separation between Alipay, its payment app, and its credit products. 

Yu’e Bao must also be reduced in size, the PBOC said. Yu’e Bao is the Ant Group’s money market fund, which was once the world’s largest. 

Both Alibaba’s massive antitrust fine and the Ant Group restructuring plan are part of China’s broader push. That is to get a tighter grip on the country’s technology companies, which turned into giants largely hindered. Their activities often span from gaming to financial technology as well as cloud computing.

There are signs that the crackdown could broaden to more companies and other areas, including data protection. That is while so far, Beijing’s eyes have been focused on Jack Ma’s empire.