An Ant Group logo is displayed at the company’s headquarters, a subsidiary of Alibaba, in Hangzhou, Zhejiang Province, China, on October 29, 2020.
Aly Song | Reuters
GUANGZHOU, China – Alibaba shares in Hong Kong are up nearly 4% on Tuesday opening after regulators ordered the e-commerce giant’s financial technology affiliate Ant Group to overhaul its operations.
That, along with an 18.23 billion yuan ($ 2.78 billion) fine that Alibaba received as a result of an anti-monopoly investigation by regulators removed a source of uncertainty for investors.
“Following the decision and sanctions imposed by SAMR’s (State Administration for Market Regulation) anti-monopoly investigation into BABA, we think the street is more colorful with the latest updates on Ant Group,” Jefferies said in a note published Monday.
Hong Kong-listed Alibaba stocks later cut their opening gains, but last rose nearly 2% during the Tuesday session. US-listed Alibaba shares closed more than 9% higher on Monday.
Alibaba has an approximately 33% stake in Ant Group, the company that operates the hugely popular Alipay mobile payment app in China. In November, regulators forced Ant Group to suspend what would have been a record $ 34.5 billion (IPO) opening in Hong Kong and Shanghai.
At the time, changes in financial technology regulations were blamed for the listing being suspended.
That came just days after Jack Ma, the founder of Ant Group and Alibaba, made some comments that seemed to be critical of China’s financial regulator.
In December, the People’s Bank of China (PBOC) ordered Ant Group to correct its affairs. And on Monday, the Chinese central bank outlined concrete details on what the company should do.
The PBOC asked Ant Group to restructure into a financial holding company. Ant Group also needs to make more separation between its payment app Alipay and its credit products. Yu’e Bao, Ant Group’s money market fund, which was once the largest in the world, also needs to be scaled down, the PBOC said.
Both Alibaba’s massive antitrust fine and Ant Group’s restructuring plan are part of a broader push from China to get a better grip on the country’s tech companies, which have largely become unencumbered giants. Their activities often span industries from gaming to financial technology and cloud computing.
While Beijing has so far set its eyes on Jack Ma’s empire, there are signs that the crackdown could spread to more businesses and other areas, such as data protection.