China’s new anti-monopoly rules have limited impact so far: analyst

Jack Ma, the founder of Alibaba Group, during the opening ceremony of the 3-All-China Young Entrepreneur Summit on September 25, 2020 in Fujian Province, Fujian, China.

Liu Ming | China News Service | Getty Images

According to a market observer, China announced new anti-monopoly rules over the weekend – but it is unlikely to have much of an impact on the market.

“The new regulation is still there, you know, there is a little sketch in the details,” Bank of Communication International managing director and head of research Hao Hong said in CNBC’s “Street Signs Asia” on Monday.

China’s State Administration for Market Regulation (SAMR) has tightened restrictions on China’s Internet giants such as Alibaba and Mituan, and introduced new guidelines on Sunday to curb monopolistic behavior. The new rules formalize a draft that was released months ago.

Shares of China’s Internet giants in Hong Kong merged with Monday’s market in the city: Tencent was up 0.48% while Mittuan jumped 1.25%. lost 0.6% and Alibaba lost 0.62%.

Nevertheless, the market move on Monday was in sharp contrast to the volatility seen in November, when Hong Kong-listed shares of China’s tech giants declined after the regulator’s initial announcement. Billions of dollars in market value were wiped out after anti-trust guidelines were proposed.

Hong said the market needed time to digest the details of the latest anti-monopoly guidelines, adding that China’s Internet giants have been operating for years and already have “very solid” market conditions.

“Regulation, you know, is starting with very good intentions,” Hong said. “The real fact is that … the market situation of these large Internet platforms … is very difficult to encroach for now.”

While Hong admitted that the new rules would “make it easier for younger people to develop,” he also said that many big internet players such as Alibaba and Tencent have also put their money into many Internet startups. “

Some well-known examples of such investments include financial technology giant Ant Group’s Alibaba stake and short video firm Kuashisho’s help from Tencent, which had strong investor interest during its $ 5 billion public listing in Hong Kong on Friday Saw it.

The increased scrutiny by Beijing comes at a time when the tech industry is coming under the regulatory spotlight worldwide, with similar movements in the US and the European Union.

– Evelyn Cheng of CNBC contributed to this report.