Chinese stocks for Alibaba and Tencent, two major technology firms, rose in Hong Kong following a huge fine, Reuters reports.
The leader of Ant Group, Jack Ma, was fined a $984 million penalty. Ant group includes e-commerce giant Alibaba, which has a direct from manufacturer to consumer model, enabling it to have extremely low prices.
Besides Ant, the Chinese authorities also announced on Friday they had fined Tencent’s online payment platform Tenpay nearly 3 billion yuan ($414.88 million) for committing violations in areas such as customer data management.
While fines might look like a problem for companies, it actually signaled the end of the Chinese government’s interference at a macro level, returning instead to regulating individual companies.
The People’s Bank of China (PBOC) said on Friday that most of the prominent problems for platform companies’ financial businesses had been rectified and regulators would now shift their focus from focusing on specific companies to overall regulation of the industry.
Jack Ma was absent from public view for several months in 2020, leading to wild speculation as to his alleged disappearance. Chinese companies are engaging in stock buybacks, something which has been criticized in the United States and is starting to be cracked down on.
Stock buybacks have essentially frozen IPOs for Alibaba and other Chinese firms. Privatization of these companies and their fragmentation into public shares would cause issues with the Chinese economic model, which gives relative latitude to investors provided the state’s interest are put above all.
