Alibaba's stock prices in Hong Kong have reportedly plummeted by 7,01% in Monday trade. The Chinese tech giant came under fire after the government ordered Ant Group, an Alibaba affiliate, to "recitify" its business and prevent monopolistic practices.
As initially reported by CNBC, this is not the only Chinese-based large company to fall in the market. Tencent Holdings Ltd, a multinational tech conglomerate known for its ownership of popular video game PUBG, also dived by 4,77%. Meituan-Dianping, a local marketplace company, slipped by 5,3%.
However, other markets in Asia seem to see a much higher edge by Monday as the final trading week of 2020 kicked off. According to the Chinese National Bureau of Statistics, despite the alarming economic effects of the coronavirus pandemic, profits at Chinese industrial firms rose to 15,5% last November compared to 2019.
The People's Bank of China subpoenaed Ant Group execs last Saturday (12/26) and issued an official order to formulate a business's rectification plan.
Ant Group is one of the world's largest financial technology companies. Chinese regulators wanted the company to rectify its business to stop its monopoly practices in the internet sector.
"Ant Group was set to IPO in China. It was going to raise a record $37 billion, making it the world's largest public listing. This would have valued the company at about $310 billion," Danny Vena from The Motley Fool predicts.
In a statement, it says that Ant lacks a "sound governance mechanism, defied regulatory compliance requirements, and engaged in regulatory arbitrage," believing that it uses its overpowered market position to hurt the rights and interest of its customers.
"We appreciate financial regulators' guidance and help," the statement said, as reported by CNBC. "The rectification is an opportunity for Ant Group to strengthen the foundation for our business to grow with full compliance, and to continue focusing on innovating for social good and serving small businesses."
Not the First Time
Earlier this week, Alibaba shares in Hong Kong also slipped by 8%. The company was in the spotlight following reports on unfair and un-sportsmanship-like monopolistic practices in the market.
As reported initially by Bloomberg, China's State Administration for Market Regulation stated that it had opened an ongoing investigation on Alibaba over the shady business practices.
Furthermore, the regulators fined Alibaba, along with Tencent Holdings Ltd, under the new anti-monopoly laws. Alibaba had to pay the penalty worth 500,000 Chinese yuan ($76,500) for failing to seek approval before increasing its stake.
"The above-mentioned companies have a large influence in the industry, carry out many investments and takeovers, have specialized legal teams and should be familiar with the regulations governing M&A. Their failure to actively declare has a relatively severe impact," the statement reads.