Jack Ma, founder of Alibaba Group, during the opening ceremony of the 3rd All-China Young Entrepreneurs Summit on September 25, 2020 in Fuzhou, Fujian Province in China.
Lyu Ming | China News Service | Getty Images
China announced new monopolistic rules this past weekend, but according to one market observer, it is unlikely to have a major impact on the market at present.
“The new regulation is still, in your opinion, slightly sketchy in detail,” Hao Hong, managing director and head of research at Bank of Communications International, told CNBC’s Street Signs Asia on Monday.
China’s state administration for market regulation (SAMR) has tightened restrictions on China’s internet giants such as Alibaba and Meituan and on Sunday introduced new guidelines to curb monopolistic behavior. The new rules formalize a concept that was introduced months before.
However, the development apparently had little effect on the shares of China’s internet giants, with most of them still in a positive area in Hong Kong by Monday afternoon: Tencent rose 0.82%, Meituan jumped 1.54% and JD.com by 1.14%. Only Alibaba caught up with the trend and fell by about 0.16%.
Monday’s market movements were in sharp contrast to the volatility seen in November, when Hong Kong – listed shares of China’s tech giants fell after the regulator’s initial announcement. Billions of dollars’ market value was wiped out after the antitrust guidelines were first proposed.
Hong said the market needed time to digest the details of the latest anti-monopoly guidelines, adding that China’s internet giants had been operating for years and already had ‘very solid’ market positions.
“The regulation starts with a very good intention,” Hong said. “The real fact is that … the market position … of these major internet platforms is very difficult to enter for now.”
While Hong acknowledged that the new rules would ‘grow’ for smaller guys, he also said that many of the big internet players, such as Alibaba and Tencent, had also ‘poured their own money into many of the internet startups. . “
Some well-known examples of such investments include the interest of Alibaba in the financial technology giant Ant Group and Tencent’s support of the short video industry Kuaishou, which had a huge stake in investors on Friday during its $ 5 billion public listing in Hong Kong.
The growing scrutiny by Beijing comes at a time when the technology industry is coming under the spotlight worldwide, with similar movements in the US as well as the European Union.
CNBC’s Evelyn Cheng contributed to this report.