Hong Kong-listed shares of Alibaba rose nearly 4% at the open but pared those gains later
Alibaba shares in Hong Kong finished 0.43% higher on Tuesday after regulators ordered the e-commerce giant’s financial technology affiliate Ant Group to revamp its business.
That, along with an 18.23 billion yuan ($2.78 billion) fine Alibaba received as a result of an anti-monopoly investigation by regulators, removed a source of uncertainty for investors.
Following the decision and penalties levied by SAMR’s (State Administration for Market Regulation) anti-monopoly investigation of BABA, we think the street has more colour about the latest updates on Ant Group, Jefferies said in a note published Monday.
Hong Kong-listed shares of Alibaba climbed nearly 4% at the open but pared those gains throughout the day. Alibaba’s U.S.-listed shares finished more than 9% higher on Monday but were nearly 1.6% lower in pre-market trade.
Alibaba, owns a roughly 33% stake in Ant Group, the company that runs the hugely popular mobile payments app Alipay in China. In November, regulators forced Ant Group to suspend what would have been a record-setting $34.5 billion initial public offering (IPO) in Hong Kong and Shanghai.
At the time, changes in the financial technology regulatory environment were blamed for the suspension of the listing.
That came just days after Jack Ma, the founder of Ant Group and Alibaba, made some comments that appeared critical of China’s financial regulator.
In December, the People’s Bank of China (PBOC) ordered Ant Group to rectify its business. And on Monday, the Chinese central bank outlined concrete details on what the company needs to do.
The PBOC asked Ant Group to restructure into a financial holding company. Ant Group must also create more separation between its payment app Alipay and its credit products. Yu’e Bao, Ant Group’s money market fund, which was once the world’s largest, must also be reduced in size, the PBOC said.