Shares in Alibaba, the ecommerce group founded by Jack Ma, fell sharply after Beijing publicly accused its payments arm of regulatory failings in its latest salvo against one of China’s richest men.
The comments by Pan Gongsheng, vice governor of the People’s Bank of China, were published on the central bank’s website on Sunday and come as the country’s authorities have turned up the pressure on Mr Ma’s business empire.
Alibaba’s stock sank as much as 7.3 per cent in early trading in Hong Kong, hitting its lowest level since July. The rebuke from the PBoC overshadowed a move by Alibaba on Monday to boost its two-year share buyback programme to $10bn from $6bn.
The company’s shares have fallen by more than 25 per cent — scything about $260bn from Alibaba’s market capitalisation — since late October, when Mr Ma publicly criticised the country’s financial regulators and state-owned banks. The personal fortune of Mr Ma, once China’s wealthiest person, has tumbled from just under $62bn to $49.3bn, according to Bloomberg data.
Proposed minimum valuation of Ant Group prior to its scuppered IPO
Beijing also halted a $37bn initial public offering by Ant Group, Alibaba’s online finance unit, following Mr Ma’s remarks. That triggered a cascade of public, state media and government criticism of alleged monopoly practices by the two companies.
China’s market regulator announced last week that it would launch an antitrust investigation into Alibaba, while Ant confirmed that it had been summoned to a meeting with the PBoC and three other regulators.
Mr Pan’s comments, posted a day after PBoC and Ant representatives met in Beijing, have refocused investor attention on the financial services group. Ant had been trying to restructure its business in an attempt to relaunch its IPO next year.
Mr Pan’s attack, however, confirmed just how daunting a task that will be. He said Ant would have to “return to its origins” as a payment services provider and “rectify” many of its fastest growing and most lucrative consumer credit and wealth management operations. Ant has begun that process in recent weeks but investors anticipate it could hit the company’s valuation if it is able to return to the market.
Ant’s IPO would have been the world’s largest and would have valued the company at more than $300bn.
Analysts are uncertain over whether a restructuring will satisfy regulators or if Ant will have to sell or close some of its consumer-credit operations. The latter have attracted fierce criticism from state-owned banks that argue Ant has benefited from looser 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 established the group more than two decades ago in Hangzhou, capital of eastern China’s Zhejiang province.
After the State Administration of Market Regulation revealed its Alibaba investigation on December 24, Zhejiang officials confirmed they had interviewed company staff and taken materials from the group’s headquarters. Zheng Shanjie, Zhejiang governor, said on Friday that the investigation was not intended to usher in “winter” for online companies, but instead mark a new “starting point” for the sector’s development.
Additional reporting by Xinning Liu and Ryan McMorrow in Beijing