HONG KONG, July 10 (Reuters): Alibaba Group and Tencent shares rose in Hong Kong on Monday as China's $984 million fine for Ant Group was viewed as signalling the end of a regulatory crackdown on the country's technology sector.
After the penalty on Friday, Jack Ma-founded Alibaba affiliate Ant announced an up to $6 billion share buyback that values the fintech company at a 75 per cent discount to the valuation touted in an abandoned initial public offering (IPO) but is seen as providing liquidity and certainty to investors.
The abrupt shelving of Ant's IPO in late 2020 heralded the start of a wide-ranging clampdown by Beijing on industries ranging from technology to education, as regulators sought to assert their authority over what they deemed to be excesses and bad practice emerging from years of runaway growth.
The scrutiny made for an uncertain environment that wiped billions off share prices, ensnaring companies from online retail giant Alibaba to gaming company Tencent and food delivery group Meituan.
Beijing's move to finalise penalties and outstanding issues with Ant and other tech names comes as China's economy "is challenged by a weak recovery" and is meant to assuage investor concerns along with commitments to open support private sector growth, said Daniel Tu, founder of Active Creation Capital.
Besides Ant, the Chinese authorities also fined Tencent's online payment platform Tenpay nearly 3 billion yuan ($414.88 million) over areas such as customer data management.
The People's Bank of China (PBOC) on Friday said that most of the prominent problems for platform companies' financial businesses had been rectified and regulators would now shift their focus to overall regulation of the industry rather than specific companies.
"We view this announcement a key milestone for a regular, clear and visible regulatory environment for China's internet companies," Huatai Research analysts wrote in a note to clients.
Alibaba, which spun off Ant 12 years ago and has a 33 per cent stake, on Sunday said it was considering whether to participate in the buyback that would transfer shares to an employee incentive scheme.
Ant's major shareholders, Hangzhou Junhan Equity Investment Partnership and Hangzhou Junao Equity Investment Partnership, which collectively hold more than 50 per cent of its shares on behalf of the company's executives and employees, will not participate in the buyback, it said.
