SINGAPORE – The growing regulatory review of Alibaba-affiliated and powerhouse technology group Ant Group could hurt China’s economy as well as China’s financial technology sector, said Andrew Collier, managing director of Orient Capital Research.
The highly anticipated listing of Chinese tech giant Ant Group – set to become the world’s first largest public offering – was abruptly canceled in November.
It came shortly after Ant governor Jack Ma and other officials at the company interviewed Chinese authorities about regulatory concerns.
“It’s true when Jack Ma gave his awful speech … which upset a lot of top politicians, I thought that was going to be kind of a one-off thing,” Collier told Squawk Box Asia “at CNBC on Tuesday.
He was referring to the Chinese billionaire’s speech at the end of October where he appeared to be criticizing governors at a controversial speech. Ma is the founder of Chinese e-commerce giant Alibaba, which owns about 33% stake in Ant Group.
Days later, Ant’s double listing in Shanghai and Hong Kong was abruptly canceled, causing shares of Alibaba to fall.
“Clearly, this was an excuse by the leadership and perhaps the state banks to crack down on the entire fintech sector…,” Collier said. “Part of this is legitimate because of concerns about, you know, the possibility … of a financial crisis. But they had already cut Ant Financial ‘s wings in very bad ways.”
It is not good for the future of fintech or the future of the Chinese economy
Anndra Collier
Managing Director, Orient Capital Research
The problems for both Alibaba and Ant have only grown since then, with Chinese authorities announcing an anti-monopoly probe into the e-commerce titan last week. Chinese regulators also ordered Ant Group to rectify their operations.
As a result of these developments, Alibaba ‘s stock on Hong Kong’ s list suffered another fall – with more than $ 831 billion Hong Kong dollars (approximately $ 107 billion) of its market cap wiped out in just two sessions, based on calculations CNBC.
Collier said the regulatory scrutiny around Ant seemed to be both based on a consumer’s desire to protect a Chinese consumer, as well as politics.
“At first I thought the line was that (People’s Bank of China) was trying to protect the consumer,” the analyst said, citing past challenges in the co-lending space. ages.
“Now that they are getting worse and worse and are coming up with new allegations and asking them to reduce large areas of their business, it is clear that it is partly a political goal to reduce size. of these companies so that they do not have a large market share and threaten the existence of the state system, “he said.
“It’s not good for the future of fintech or the future of China’s economy,” Collier said.