Alibaba Suffers $850 Billion Valuation Loss Amid China's Crackdown on Big Tech
"Disorderly Capital Expansion" Fine of 1.3 Trillion
Stock Price Falls Amid Listing Delay
China's largest e-commerce company Alibaba Group and its financial subsidiary Ant Group have reportedly suffered an estimated $850 billion valuation loss due to clashes with Chinese authorities, resulting in a delayed IPO and a decline in stock prices.
According to Bloomberg, on the 8th, Chinese financial regulators including the People's Bank of China and the China Banking and Insurance Regulatory Commission imposed a $1 billion (approximately 1.3838 trillion KRW) fine on Ant Group and its subsidiaries for violations of the Anti-Money Laundering Law, the Banking Supervision Law, and the People's Bank of China Law. The reason cited was that Ant Group had expanded its capital disorderly, posing risks to the financial market.
The $1 billion fine is the second largest penalty imposed by the Chinese government on big tech companies, following the $1.2 billion fine on China's ride-hailing service provider Didi Chuxing in July last year.
Bloomberg also noted that beyond the fine, the valuation loss Ant Group suffered due to regulatory delays in its IPO was substantial. Previously, Ant Group indefinitely postponed its dual listing plans on the Hong Kong and Shanghai Stock Exchanges in 2020. Had the IPO succeeded, Ant Group's market capitalization was expected to approach approximately $315 billion, but with the indefinite delay, the company's value has been reduced to a quarter of that over three years. As of the 8th, Ant Group's self-assessed corporate value stood at $78.44 billion. The parent company Alibaba also lost $620 billion in market capitalization amid the flood of Chinese regulatory measures.
Chinese financial authorities targeted Alibaba with regulatory measures after its founder Ma Yun (pictured) criticized the authorities. In 2020, Ma Yun publicly criticized China's conservative financial regulations by likening them to a pawnshop. The market views the delay of Ant Group's IPO as part of the government's retaliatory actions.
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However, there are prospects that the regulatory measures will conclude with this fine. If the authorities' regulatory actions are finalized, it could accelerate Ma Yun's official return to management.
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