The Hong Kong-listed shares of Alibaba and Tencent rose on Monday, amid optimism that China’s crackdown on the technology sector is nearing the end after the central bank imposed fines on Ant Group and Tencent (OTCPK:TCEHY) last week.
Shares of Alibaba ended 3.2% higher in Hong Kong, while Tencent closed up 0.7%. U.S.-listed shares of Alibaba (NYSE:BABA) dipped 1% premarket on Monday after ending 8% higher on Friday.
The People’s Bank of China slapped a $985M fine on Ant Group, in which Alibaba (BABA) owns a 33% stake. The fine means that Ant Group can explore an IPO again, close to three years after its plans were blocked for not meeting listing requirements.
After the penalty was revealed, Ant Group announced a surprise stock buyback that values the fintech giant at RMB 567.1B (~$78.38B), well below the $315B valuation sought in 2020 for what would’ve been the world’s largest IPO. Alibaba (BABA) is considering participating in the buyback.
PBOC also fined Tencent (OTCPK:TCEHY) and its payment unit Tenpay ~$410M, which the company said will not have any material impact on its operations.
“Since November 2020, the financial management department has guided Ant Group, Tencent and other large platform companies to rectify violations of laws,” said PBOC. “At present, most outstanding problems have been rectified,” adding that its focus will now shift to “normalized supervision.”
Fines were also imposed on Postal Savings Bank (OTCPK:PSTVY), Ping An Bank (OTCPK:PNGAY), PICC Property Insurance (OTCPK:PPCCF).
“We believe the fines indicate that the rectification of large fintech platforms has come to an end,” said JPMorgan’s Alex Yao.
