SINGAPORE – The increasing scrutiny of the regulations of the Alibaba-affiliated and financial technology powerhouse Ant Group could be bad for the Chinese economy as well as the Chinese financial technology sector, says Andrew Collier, managing director of Orient Capital Research.
The highly anticipated listing of Chinese technology giant Ant Group – which would be the world’s largest initial public offering – was abruptly suspended in November.
This came shortly after Ant Ma’s manager Jack Ma and other executives at the firm were questioned by Chinese authorities about worrying regulations.
“It’s true that when Jack Ma gave his awful speech … which annoyed many senior politicians, I thought it would be kind of a one-time thing,” Collier told CNBC’s “Squawk Box Asia” on Tuesday .
He referred to the speech of the Chinese billionaire at the end of October, where he apparently criticized regulators during a controversial speech. Ma is the founder of Chinese e-commerce giant Alibaba, which owns a 33% stake in Ant Group.
Days later, Ant’s double listing in Shanghai and Hong Kong is suddenly suspended and Alibaba shares are lowered.
“Clearly, this was an excuse by the leadership and probably the state-owned banks to cage the entire fintech sector,” Collier said. “Part of this is legal because of concerns about the possibility … of a financial crisis. But they have already cut the wings of Ant Financial in a very serious way.”
This is not good for the future of fintech or the future of the Chinese economy
Andrew Collier
Managing Director, Orient Capital Research
The problems for Alibaba and Ant have only increased since then, with Chinese authorities announcing an anti-monopolistic investigation into the e-commerce titan last week. Chinese regulators also recently ordered Ant Group to rectify its ventures.
These developments have led to another drop in Alibaba’s listed shareholding in Hong Kong – with more than 831 billion Hong Kong dollars (approximately $ 107 billion) of its market capitalization, based on CNBC’s calculations in two sessions.
Collier said the regulatory investigation surrounding Ant is likely to be focused on a desire to protect the Chinese consumer as well as politics.
“Initially, I believed the line that the (People’s Bank of China) was trying to protect the consumer,” the analyst said, citing past challenges in the peer-to-peer lending space.
“As they get so serious and come up with new allegations and tell them to reduce large parts of their business, it’s clear that it’s partly a political goal to reduce the size of these businesses so that they do not have significant market share. and threatens the existence of the state system, ”he added.
“This is not good for the future of fintech or the future of the Chinese economy,” Collier said.