The increasing regulatory scrutiny of Alibaba-affiliate and financial
technology powerhouse Ant Group could be bad for the Chinese economy as
well as China’s financial technology sector, says Andrew Collier,
managing director of Orient Capital Research.The highly-anticipated
listing of Chinese tech giant Ant Group — which was set to be the
world’s largest initial public offering — was abruptly suspended in
November.To get more news about
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It
came shortly after Ant’s controller Jack Ma and other executives at the
firm were interviewed by Chinese authorities over regulatory
concerns.“It is true that when Jack Ma gave his terrible speech ... that
annoyed a lot of senior politicians, I thought that was gonna be kind
of a one-off thing,” Collier told CNBC’s “Squawk Box Asia” on Tuesday.
He
was referring to the Chinese billionaire’s speech in late October where
he reportedly appeared to criticize regulators during a controversial
speech. Ma is the founder of Chinese e-commerce giant Alibaba, which
owns a roughly 33% stake in Ant Group.Days later, Ant’s dual-listing in
both Shanghai and Hong Kong was suddenly suspended, sending shares of
Alibaba plunging.
“Clearly, this was an excuse by the leadership
and probably the state banks to crack down on the entire fintech …
sector,” Collier said. “Part of this is legitimate because of concerns
about, you know, the possibility … of a financial crisis. But they
already had clipped the wings of Ant Financial in quite serious
ways.”The troubles for both Alibaba and Ant have only grown since, with
Chinese authorities announcing an anti-monopoly probe into the
e-commerce titan last week. Chinese regulators also recently ordered Ant
Group to rectify its businesses.
Those developments resulted in
Alibaba’s Hong Kong-listed stock suffering yet another drop — with more
than 831 billion Hong Kong dollars (approx. $107 billion) of its market
cap was wiped out in just two sessions, based on CNBC’s calculations.
Collier
said the regulatory scrutiny surrounding Ant was likely both centered
around a desire to protect the Chinese consumer, as well as
politics.“Initially I kind of believed the line that the (People’s Bank
of China) was trying to protect the consumer,” the analyst said, citing
past challenges in the peer-to-peer lending space.
“Now, since
they’re getting so serious and they’re coming up with new allegations
and telling them to reduce large areas of their business, it’s clear
it’s partly a political aim at reducing the size of these companies so
they don’t have significant market share and threaten the existence of
the state system,” he added.
The Wall