SINGAPORE – Orient Capital Research managing director Andrew Collier says the growing regulatory scrutiny of Alibaba-affiliated and financial technology powerhouse ANT Group could be bad for the Chinese economy as well as China’s financial technology sector.
Chinese tech giant Ant Group’s highly anticipated list – set as the world’s largest initial public offering – was abruptly suspended in November.
This came shortly after Ant’s controller Jack Ma and other executives at the firm were interviewed by Chinese officials on regulatory concerns.
“It is true that when Jack Ma made his terrible speech … which angered a lot of senior politicians, I thought it was a kind of thing on Tuesday,” Collier told CNBC’s “Squawk Box Asia” .
He was referring to the Chinese billionaire’s speech in late October, where he appeared during a controversial speech criticizing regulators. Ma is the founder of Chinese e-commerce giant Alibaba, which owns about 33% stake in Ant Group.
A few days later, Ant’s dual-listing in both Shanghai and Hong Kong was abruptly postponed, causing Alibaba shares to fall.
“Clearly, this was an excuse for leadership and perhaps state banks to crack the whole fintech … sector,” Collier said. “It’s legitimate because of concerns about, you know, the possibility … of a financial crisis. But they had already cut Ant Financial’s wings in quite serious ways.”
Troubles have increased for both Alibaba and Ant since Chinese authorities announced an anti-monopoly investigation into the e-commerce titan last week. Chinese regulators also recently ordered Ant Group to reform its businesses.
Those developments resulted in another fall in Alibaba’s Hong Kong-listed stock – wiping out its market cap of over 831 billion Hong Kong dollars (about $ 107 billion) in just two sessions based on CNBC’s calculations.
Collier said the regulatory investigation around Ant probably centered around a desire to protect both the Chinese consumer, as well as politics.
“Initially I used to think that Line (People’s Bank of China) is trying to protect the consumer,” the analyst said, citing past challenges in the peer-to-peer lending space.
“Now, because they are getting so serious and they are coming up with new charges and asking them to reduce large areas of their business, it is clear that this is partly to reduce the size of these companies Have a political purpose, so they do not have significant market share and threaten the existence of the state system, ”he said.
“This is not good for the future of fintech or the future of the Chinese economy,” Collier said.