Alibaba Group Holding’s (阿里巴巴) US-listed shares tumbled the most ever on concern over China’s inquiry into alleged monopolistic practices at the e-commerce company.
Affiliate Ant Group Co (螞蟻集團), the other pillar of billionaire Jack Ma’s (馬雲) Internet empire, was also summoned to a high-level meeting over financial regulations.
The pressure on Ma is central to China’s efforts to rein in an increasingly influential Internet sphere: Draft anti-monopoly rules released last month gave Beijing wide latitude to restrain entrepreneurs who until recently enjoyed unusual freedom to expand their realms.
The Alibaba inquiry is “a warning that winds have shifted,” Bloomberg intelligence analyst Vey-Sern Ling said in a research note.
The risk is that business operations “could face long-term headwinds” as a result of such moves, he said.
The stock fell 13 percent in its biggest one-day drop on record. The decline took Alibaba to its lowest level since July, and the stock is now down 30 percent from an October peak. About 141 million shares exchanged hands, the most for a single session since its 2014 debut.
Alibaba said in a statement that it would cooperate with regulators in their investigation and that its operations remain normal.
Once hailed as drivers of economic prosperity and symbols of China’s technological prowess, Alibaba and rivals like Tencent Holdings Ltd (騰訊) face increasing pressure from regulators after amassing hundreds of millions of users and gaining influence over almost every aspect of daily life in China.
“It’s clearly an escalation of coordinated efforts to rein in Jack Ma’s empire, which symbolized China’s new ‘too-big-to-fail’ entities,” said Dong Ximiao (董希淼), a researcher at Zhongguancun Internet Finance Institute (中關村互聯網金融學院). “Chinese authorities want to see a smaller, less dominant and more compliant firm.”
The Chinese State Administration for Market Regulation is investigating Alibaba, the top antitrust watchdog said in a statement without further details.
Regulators including the Chinese central bank and banking watchdogs would separately bring in affiliate Ant to a meeting intended to drive home increasingly stringent financial regulations, which now pose a threat to the growth of the world’s biggest online financial services firm.
Ant said in a statement on its official WeChat account that it would study and comply with all requirements.
Ma, the flamboyant cofounder of Alibaba and Ant, has all but vanished from public view since Ant’s initial public offering (IPO) got derailed last month.
As of early this month, Ma, most closely identified with the meteoric rise of China Inc, was advised by Beijing to stay in the country, a person familiar with the matter said.
Ma is not on the verge of a personal downfall, those familiar with the situation said.
His very public rebuke is instead a warning that Beijing has lost patience with the outsize power of its technology moguls, increasingly perceived as a threat to the political and financial stability President Xi Jinping (習近平) prizes most.
Alibaba shares slid 8 percent in Hong Kong to a five-month low trough Thursday.
Asia’s largest company after Tencent has led losses among China’s Internet sector leaders since Ant’s IPO got yanked, taking the overall toll to about US$200 billion.
Tencent and Tnternet services giant Meituan Dianping (美團點評) finished more than 2.6 percent lower, while SoftBank Group Corp, Alibaba’s largest shareholder, sank 1.7 percent in Tokyo.
While China is preparing to roll out the new anti-monopoly regulations, the country’s leaders have said little about how harshly they plan to clamp down or why they decided to act now.
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