Shares of Alibaba, the e-commerce group founded by Jack Ma, fell sharply after Beijing publicly accused his payment arm for regulatory failures in his latest volley against one of China’s richest men.
the comments by Pan Gongsheng, vice-governor of the People’s Bank of China, were posted on the central bank’s website on Sunday, and come as the country’s authorities increased pressure on Mr. Ma’s business empire.
Alibaba stock fell 7.3% at the start of negotiations in Hong Kong, reaching its lowest level since July. The PBoC reprimand overshadowed Alibaba’s decision on Monday to increase its two-year share buyback program to $ 10 billion from $ 6 billion.
Shares of the company have fallen more than 25% – or about $ 260 billion of Alibaba’s market capitalization – since late October, when Mr. Ma publicly criticized the country’s financial regulators and state-owned banks. The personal fortune of Mr. Ma, once the richest person in China, has grown from just under $ 62 billion to $ 49.3 billion, according to Bloomberg data.
300 billion dollars
Proposed minimum valuation of Ant Group before its IPO scupper
Beijing also arrested a Initial public offering of $ 37 billion by Ant Group, Alibaba’s online finance unit, following Mr. Ma’s remarks. This sparked a cascade of public, state media and government criticism against the two companies’ alleged monopoly practices.
Chinese market regulator ad last week he would launch an antitrust investigation into Alibaba, while Ant confirmed he was called to a meeting with the PBoC and three other regulators.
Pan’s comments, released a day after the PBoC and Ants officials met in Beijing, refocused investors’ attention on the financial services group. Ant had tried to restructure its business in an attempt to relaunch its IPO next year.
Mr. Pan’s attack, however, confirmed how difficult the task will be. He said Ant should ‘go back to its roots’ as a payments service provider and ‘rectify’ many of its fastest growing and lucrative consumer credit and wealth management operations. . Ant has started this process in recent weeks, but investors expect her to reach the company’s valuation if she is able to return to the market.
Ant’s IPO was reportedly the largest in the world and valued the company at over $ 300 billion.
Analysts are unsure whether a restructuring will satisfy regulators or whether Ant will have to sell or close some of its consumer credit operations. These have drawn strong criticism from state-owned banks who say Ant has benefited from more flexible regulatory oversight.
The parallel move against Alibaba, which is listed in Hong Kong and New York, has further raised the stakes for Mr. Ma, who founded the group more than two decades ago in Hangzhou, capital of Zhejiang province, in eastern China.
After the State Administration of Market Regulation revealed its investigation into Alibaba on December 24, Zhejiang officials confirmed that they had interviewed company staff and taken documents from the group’s headquarters. Zheng Shanjie, Governor of Zhejiang, said on Friday that the investigation was not intended to usher in “winter” for online businesses, but rather to mark a new “starting point” for the development of the sector.
Additional reporting by Xinning Liu and Ryan McMorrow in Beijing