Alibaba's Hong Kong-listed shares increased as a result of beliefs that the extensive examination of its financial arm Ant Group will soon be over.The Chinese regulators declared on Friday that a majority of the remaining issues associated with the fiscal undertakings of platform organizations have been settled and that the local tech sector will witness "normalized supervision."
Hong Kong-listed shares of Alibaba saw a 3% increase on Monday, a reaction to the speculation that the prolonged examination of its subsidiary company, Ant Group, may be coming to an end. Last Friday, Chinese regulators imposed a 7.12 billion yuan ($985 million) sanction on the Ant Group, which may indicate the end of Beijing's suppression of its domestic tech corporations. In late 2020, Ant Group's original public listing was put on hold due to it not meeting the essential conditions. In 2021, Alibaba received a penalty of 2.8 billion yuan for antitrust violations while Meituan, the food delivery service, got a 3.44 billion yuan penalty for breaching anti-monopoly laws. In 2022, ride-hailing bigwig Didi was fined 8.02 billion yuan for disregarding data safety regulations. The Chinese authorities declared Friday that the majority of the leftover obstacles that had been associated with the financial services of platform enterprises have been taken care of and that the local tech sector will be put under regular control.
In March, Alibaba announced a significant reshaping of its operations, causing some market analysts to assume this might be a signal China's administration would relax its control of the tech industry at home. Nevertheless, Oshadhi Kumarasiri at LightStream Research said in a Smartkarma report that the regulators had also mentioned the need for more general regulations to oversee the sector, leading to suspicions these new rules could be equally strict. Ronald Wan, non-executive chairman of Partners Financial Holdings, then informed CNBC's "Street Signs Asia" that the development pace of Alibaba and Ant Group would be "significantly reduced" in the future; he compared this situation to a state-run bank in China.
Shawn Yang, Managing Director of Blue Lotus Research Institute, expressed that he is bullish on Alibaba following Ant Group's fine. Yang stated that Blue Lotus Research Institute concluded that Ant Group would be worth approximately $89 billion, of which Alibaba's stake is estimated to be $29.4 billion based on their 33% ownership. Yang suggested that Bloomberg's reported valuation of Ant Group between $22 billion and $57 billion is too low, as Ant Group can be valued at a multiple similar to PayPal, which suggests upside to the Bloomberg valuation. Following the buyback on Saturday, which valued the company at $78.53 billion according to CGTN, Yang commented that it raises queries, particularly due to the company's plans of an IPO in the near future. He pointed out that their justification for the buyback that includes providing liquidity to existing investors and employee incentives "seems unnecessary if an IPO was imminent".
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