China’s Regulatory Pressure On Alibaba And Ant Group Sends Tech Stocks Tumbling

Shares of Chinese tech giants tumbled Monday as concerns mount that a regulatory clampdown targeting Jack Ma’s businesses will spread across the wider internet sector.

Chinese regulators said Sunday that Ant Group had been ordered to revamp its business by returning to its origins as an online payments platform. The fintech firm was told it needs to “rectify” its credit, insurance and wealth management businesses, according to a statement from the People’s Bank of China. 

The central bank’s statement came less than two months after regulators blocked Ant’s initial public offerings in Hong Kong and Shanghai that had been set to raise $34.5 billion. Chinese leaders reportedly halted the deal after Ma publicly complained that the regulators were too focused on controlling risk at the expense of innovation that was needed to build a healthy financial system.

The Hong Kong-listed shares of Ant’s parent company, Alibaba Group, plunged almost 8% on Monday, after tumbling just over 8.1% on Thursday.

China’s State Administration for Market Regulation said Thursday it was probing Alibaba for alleged monopolistic practices. The e-commerce site is accused of forcing merchants to sell exclusively on its website, effectively shunning rivals like JD.com.

The People’s Daily, the main newspaper of the Chinese Communist Party, almost immediately endorsed the probe into Alibaba, a further sign of support and coordination of regulators’ efforts to clampdown on China’s internet sector.

The Politburo, the Party’s top decision-making body, had earlier indicated that it would strengthen anti-monopoly efforts as it seeks to rein in what it called “disorderly capital expansion.” In November, Beijing introduced draft regulations aimed at eradicating monopolistic practices in the internet industry.

Stocks of fellow Chinese tech heavyweights also fell on Monday. Shares of Tencent, which is chaired by billionaire Ma Huateng (no relation to Jack Ma), dropped 6.6% Monday. JD.com, an e-commerce service similar to Alibaba, dropped 2.1%, while food delivery giant Meituan tumbled 6.9%.