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Mon, December 28, 2020 – 2:18 pm
China’s e-commerce leader on Monday raised a proposed share buyback program at $ 4 billion to $ 10 billion, effective for two years through the end of 2022. The buyback program, which began this quarter, did not managed to stop a drop in stocks. which slipped more than 5 percent in Hong Kong to a six-month low.
Once hailed as the standard bearers of China’s economic and technological ascendancy, Alibaba and rivals like Tencent Holdings are now facing increasing pressure from regulators concerned about the speed with which they are amassing hundreds of millions of users and gaining influence over almost everyone. aspects of daily life. lifetime. Alibaba has lost more than $ 230 billion since its peak, hit by deepening scrutiny and accusations of monopolistic practices at the crown jewel of billionaire Mr. Ma’s empire.
Shares of Tencent and its Alibaba rival JD.com Inc fell roughly 2% in Hong Kong, while food delivery giant Meituan plunged more than 4% as investors feared the antitrust network could be expanded even further. Affiliate Alibaba Health Information Technology posted its biggest two-day drop since July 2015. The People’s Daily, the Communist Party spokesman, posted a comment over the weekend warning Alibaba peers to take the antitrust investigation into Alibaba as an opportunity to become aware of fair competition.
“The Chinese government is putting more pressure or wants to have more control over technology firms,” said Jackson Wong, director of asset management at Amber Hill Capital. “There is still great selling pressure on companies like Alibaba, Tencent or Meituan. These companies have been growing at a rate that Beijing considers too fast and they have too large scales.”
The State Administration for Market Regulation launched an antitrust investigation on Alibaba last week and dispatched officials to its Hangzhou headquarters, marking the formal start of the Communist Party’s crackdown on the company that made Ma the best-known businessman in the world. country. On Sunday, Chinese regulators ordered Ma’s other online titan, Ant Group Co, to return to its roots as a payment service provider, threatening to accelerate the growth of its most lucrative consumer loan and wealth management businesses.
Ma, the flamboyant co-founder of Alibaba and Ant, has all but disappeared from the public eye since Ant’s initial public offering went off the rails last month. In early December, the government advised the man most identified with the meteoric rise of China Inc to stay in the country, a person familiar with the matter said.
Ma is not on the brink of a personal downfall, those familiar with the situation have said. His public rebuke is instead a warning that Beijing has lost patience with the enormous power of its tech moguls, increasingly seen as a threat to the political and financial stability that President Xi Jinping values most.
Investors remain divided over the extent to which Beijing will go after Alibaba and its compatriots as Beijing prepares to implement the new antitrust regulations. The country’s leaders have said little about the severity with which they plan to take drastic measures or why they decided to act now.
Some analysts predict that a crackdown is coming, but directed. They point to language in the regulations that suggests a strong focus on online trading, from forced exclusive deals with merchants known as “Pick one of two” to algorithm-based pricing that favors new users. The regulations specifically warn against selling below cost to eliminate rivals.
“Given that this latest investigation comes at a time when China is ready to take action against monopolistic practices, we believe SAMR might want to use the BABA case as a precedent to send a message to the rest of the industry that the authority it is determined this time to address the “price issue,” Nomura analysts wrote in a note Monday.
BLOOMBERG
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