Shares in Chinese tech giant Alibaba have tumbled after the Financial Times reported that Beijing is planning to break up Alipay, China’s biggest payment app owned by its financial affiliate, Ant Group.
Alibaba shares fell a whopping 7% in Hong Kong before trimming losses to roughly 4% at the close.
The stock has shed 46% since early November 2020, when Chinese regulators halted Ant Group’s giant IPO at the last minute, shaving about $380 billion off Alibaba’s market value. In New York, Alibaba shares are off 1.6% in premarket trading.
Step back
Ant Group was spun off from Jack Ma’s Alibaba in 2011, though Alibaba still owns a third of the fintech company, which has been a top target of Beijing’s campaign to curb the influence of private businesses.
Since hauling its IPO, regulators have ordered the company to restructure as a financial holding firm. Its payment app, which counts more than 700 million monthly active users, could be next in line.
According to the Financial Times report, a separate platform for Alipay’s profitable lending operation would be created under the plan. If that happens, it would be Beijing’s latest move to tighten its screws on big businesses.
Chinese regulators, according to the FT, are also pushing Ant to turn over the user data that underpins its lending decisions.
Alibaba & its tussle with regulators
While this is a big blow to Ant Group, this is, however, not the first time the Chinese government is targeting Ant Group.
Jack Ma’s business empire has been hit by a series of high-profile regulatory measures recently. It started in October last year after Jack Ma criticized regulators, suggesting that they were stifling innovation.
The following month, regulators scuppered the record $37 billion sharemarket launch of Ant Group. In April this year, regulators dished out a record $2.8 billion fine to Alibaba over monopoly concerns. These were in addition to a call for Ant Group to restructure itself into a financial holding firm.
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According to the FT report, Ant will not be the only Chinese online lender to be affected by the new rules. For one thing, Chinese regulators have recently been targeting other Internet giants as well as cracking down on cryptocurrencies.
On Monday, other Chinese tech stocks also fell after China ordered the country’s Internet firms to end a longstanding practice of blocking rivals’ links on their platforms. Meituan shed 4.5% and Tencent lost 2.4% following the announcement.
