SINGAPORE – The increasing regulatory scrutiny of Alibaba affiliates and financial technology powerhouse Ant Group could be bad for both the Chinese economy and China’s financial technology sector, said Andrew Collier, general manager of Orient Capital Research.
The long-awaited listing of Chinese tech giant Ant Group – which would become the world’s largest IPO – was abruptly suspended in November.
It came shortly after Ant’s controller Jack Ma and other executives at the company were interviewed by Chinese authorities about regulatory concerns.
“It is true that when Jack Ma gave his terrible speech … that annoyed a lot of senior politicians, I thought that would be a one-off thing,” Collier told CNBC’s “Squawk Box Asia” Tuesday.
He was referring to the Chinese billionaire’s speech in late October, where he allegedly appeared to criticize regulators during a controversial speech. Ma is the founder of the Chinese e-commerce giant Alibaba, which owns an approximately 33% stake in Ant Group.
Days later, Ant’s dual listing in both Shanghai and Hong Kong was suddenly suspended, causing Alibaba’s shares to plummet.
“This was clearly an excuse from the leaders and probably the state banks to crack down on the entire fintech… sector,” said Collier. Some of this is legitimate because of concerns about, you know, the possibility … of a financial crisis. But they had already thrown Ant Financial off in pretty serious ways. ”
It’s not good for the future of fintech or the future of the Chinese economy
Andrew Collier
Managing Director, Orient Capital Research
The problems for both Alibaba and Ant have only gotten worse since then, when Chinese authorities announced an anti-monopoly investigation into the e-commerce titan last week. Chinese regulators also recently ordered Ant Group to correct its operations.
Those developments resulted in Alibaba’s Hong Kong-listed shares falling again – wiping out more than $ 831 billion (about $ 107 billion) of its market cap in just two sessions, according to CNBC’s calculations.
Collier said regulatory oversight around Ant was likely focused on the desire to protect Chinese consumers as well as politics.
“Initially, I more or less believed the line that the (People’s Bank of China) was trying to protect consumers,” the analyst said, referring to past peer-to-peer lending challenges.
“Now that they get so serious and they come up with new allegations and tell them they need to downsize large parts of their business, it is clear that it is partly a political goal to reduce the size of these companies so that they do not have significant market share and threatens the very existence of the state system, “he added.
“It’s not good for the future of fintech or the future of the Chinese economy,” said Collier.