Alibaba probe scares off investors from Chinese tech firms amid gov’t crackdown

Since Chinese regulators kicked off an alleged anti-monopoly probe into Alibaba last Thursday, Alibaba, Tencent, Meituan, and JD.com have lost nearly US$200 billion in the Hong Kong stock market, said the report. The government’s move stands for its plans of having wider supervision over the tech industry in the country.

On Monday, Alibaba’s fintech affiliate Ant Group was asked by regulators to return to its roots as a provider of payments services, as well as to “rectify” its lending, insurance, and wealth management businesses. Following the announcement, shares of Alibaba in Hong Kong fell by over 7%, while both Tencent’s and Meituan’s dropped by more than 6%.

In November, the Chinese government released a draft of its anti-monopoly rules after the suspension of Ant Group’s US$35 billion IPO.

The internet industry will be added to the existing Antitrust Law, which would allow the government to fine violators up to 10% of their revenue. This means Alibaba could attract a fine as large as US$7.8 billion.

“The Chinese government is putting more pressure or wants to have more control [over] the tech firms. […] There is still very big selling pressure on firms like Alibaba, Tencent, or Meituan. These companies have been growing at a pace deemed by Beijing as too fast and have scales that are too big,” Jackson Wong, asset management director at Amber Hill Capital, told Bloomberg.