US-listed Alibaba shares crash most ever on Chinese monopoly investigation – business news

Shares of Alibaba Group Holding, which are listed on the US market, have collapsed the most ever due to concerns over a Chinese investigation into the alleged monopolistic practices of the e-commerce company.

Associated company Ant Group Co., the second pillar of billionaire Jack Ma’s online empire, was also invited to a high-level meeting over financial regulations. Pressure on Ma is crucial to China’s broader efforts to curb the increasingly influential internet sphere: Draft antitrust rules released in November gave the government broad freedom to curb entrepreneurs who until recently enjoyed the unusual freedom to expand their territories.

The Alibaba investigation “is a warning that the winds have shifted,” Bloomberg Intelligence said in a research note. The risk, analyst Vey-Sern Ling wrote, is that business operations “could face prolonged winds” as a result of such moves.

Shares fell 13% in their biggest one-day decline recorded. Alibaba dropped to its lowest level since July, and shares are now down 30% from their October high. Approximately 141 million shares have exchanged hands, the most in one session since its debut in 2014.

Alibaba said in a statement that she would cooperate with regulators in their investigation and that her business remains normal.

Once called as the drivers of economic prosperity and symbols of the country’s technological power, Alibaba and rivals like Tencent Holdings Ltd. they face increasing pressure from regulators after they have amassed hundreds of millions of users and gained an impact on almost every aspect of everyday life in China.

“It’s obviously an escalation of a coordinated effort to curb Jack Ma’s empire, which symbolized new Chinese entities” too big to fail, “said Dong Ximiao, a researcher at the Zhongguancun Institute of Internet Finance.” Chinese authorities want to see less, less dominant and more aligned firm. “

The state administration for market regulation is investigating Alibaba, the top antitrust supervisor said in a statement without further details. Regulators, including the central bank and the banking supervisory agency, will bring associate Ante to a meeting aimed at launching increasingly stringent financial regulations, which now pose a threat to the growth of the world’s largest online financial services company. Ant said in a statement on his official WeChat account that he would study and meet all the requirements.

Ma, the flashy co-founder of Alibaba and Ant, has almost disappeared from the public eye since Ant’s initial public offering derailed last month. In early December, the government advised a man most closely identified with China Inc.’s meteoric rise to stay in the country, a person familiar with the issue said.

He is not on the verge of a personal fall, experts on the situation said. His very public rebuke is, instead, a warning that Beijing has lost patience with the great power of its technological moguls, which is increasingly seen as a threat to political and financial stability. President Xi Jinping rewards the most.

Alibaba slipped 8% in Hong Kong over a five-month period. The largest Asian corporation after Tencent has led to losses among the leaders of the Chinese Internet sector since Ant’s IPO abruptly caused a total tax of about 200 billion dollars. Giant Tencent and Internet services Meituan ended more than 2.6% lower, while SoftBank Group Corp., Alibaba’s largest shareholder, sank 1.7% in Tokyo.

As China prepares to introduce new antitrust regulations, the country’s leaders have said little about how strongly they plan to give up or why they have decided to act now.

China’s Internet ecosystem – long protected from competition such as Google and Facebook – is dominated by two companies, Alibaba and Tencent, through a maze of investment networks that cover the vast majority of the country’s start-ups in the arenas from AI to digital finance. Their patronage has also nurtured a new generation of titans, including food and travel giant Meituan and Didi Chuxing – Chinese Uber. Rare are those who advance outside their orbit, and the largest owner of TikTok is ByteDance Ltd.

Antitrust rules now threaten to disrupt that status quo with a range of potential outcomes, from a benign fine scenario to the collapse of industry leaders. Some analysts predict that repression is imminent, but targeted. They point to a language in regulations that suggests a strong focus on online commerce, from forced exclusive arrangements with merchants known as “Choose One of Two,” to algorithm-based pricing favoring new users. Regulations specifically warn of selling at a lower price to eliminate rivals.

But the various agencies in Beijing seem to be coordinating their efforts – a bad sign for the Internet sector.

“There is nothing that the Chinese Communist Party does not control and anything that seems to be coming out of its orbit in any way will withdraw very quickly,” said Alex Capri, a researcher from Hinrich, Singapore. Foundation.

The campaign against Alibaba and its peers entered high speed in November, after Ma famously attacked Chinese regulators in a public address due to time lag. Market supervisors then suspended IP’s Ant – the world’s largest with $ 35 billion – while the antitrust supervisor drafted the law shortly thereafter.

The People’s Daily warned on Thursday that the fight against alleged monopolies is now a top priority. “The antitrust has become an urgent issue that concerns all issues,” the commentary, which coincides with the announcement of the investigation, reads. “Wild growth” in the markets must be suppressed by law, it added. A Communist Party spokesman said in a comment on Friday that Chinese Internet companies should consider the investigation into Alibaba as an opportunity to improve their awareness of fair competition and antitrust practices.

The chances that Ant will be able to revive its massive stock lists next year are dwindling as China reconsiders the rules governing the fintech industry, which has flourished in recent years as an alternative to traditional state-backed lending.

China is said to have separately set up a joint working group to oversee Antu, led by the Financial Stability and Development Committee, a financial system regulator, along with various central bank departments and other regulators. The group is in regular contact with Ante to collect data and other materials, studying its restructuring as well as drafting other rules for the fintech industry.

“China has directed much of the bureaucracy, making it easier for different regulators to work together now,” said Mark Tanner, general manager of the Shanghai-based consulting firm China Skinny. “Of all the regulatory hurdles, this is the biggest in the long run.”