Alibaba Group’s Share Price Strengthens, The End of China’s Crackdown Is Investors Bet – Shares of Alibaba Group and Tencent rose in Hong Kong on Monday, July 10, 2023 after a $984 bar set on Jack Ma’s Ant Group appeared to signal the end of government control over the country’s technology sector.

Following the ban last Friday, July 7, 2023, an Alibaba subsidiary announced a buyback compensating the financial technology (fintech) company with a 75% discount from the announced price in its planned initial public offering (IPO). But it is seen as giving investors money and confidence.

The sudden postponement of Ant’s IPO to the end of 2020 marked the beginning of a massive crackdown by Chinese authorities in areas ranging from technology to education.

In other words, regulators are trying to assert their authority over what they perceive to be the excesses and abuses that have resulted from years of the industry’s rapid growth.

The review linked decades-old companies to startups operating in new, uncertain environments and costing billions in share price, drawing business from online giant Alibaba and companies Tencent Games and Meituan Food Delivery.

In addition to Ant, Chinese authorities also announced over the weekend fines of nearly three billion yuan ($414.88) for Tencent’s online payment platform Tenpay for violations in areas such as customer data management.

The People’s Bank of China (PBoC) said that many important factors in the platform of government-regulated financial institutions will now shift their focus and focus on specific institutions and control companies as a whole.

According to Kingston Securities managing director Dickie Wong, Hong Kong-listed Alibaba shares were up nearly 4% by 0230 GMT on Monday, outpacing a 1.3% gain for the broader market, while Tencent shares were up 1%.

“Their share price rose sharply today, mainly on hopes that regulatory pressure from the Chinese government will ease,” said Dickie Wong, quoted by KaditaNews from Reuters on Monday, July 10, 2023.

Ant Group Valuation Cut

Alibaba, which founded Ant 11 years ago and owns 33% of its shares, said on Sunday it was considering a takeover bid.

Shares of US-listed Alibaba rose 8% on Friday after the ban, one of the most heavily imposed on an internet company in China. Ant and his colleagues are considered to have violated the rules and regulations in various areas.

This includes corporate governance, consumer protection, payment and settlement programs, and anti-money laundering operations, said the PBoC. Ant announced on Saturday (7/8) it is offering all shareholders to purchase up to 7.6% of its capital at a price representing a unit value of approximately $78.5 billion.

That compares with a 2020 valuation of $315 billion for what was expected to be the world’s largest IPO, had Chinese authorities not called it off at the last minute.

The end of Ant’s sentence is seen as paving the way for the company to acquire corporate bonds, increase its growth rate, and eventually go ahead with its IPO plans.

An analyst at LightStream Research, Oshadhi Kumarasiri said the reason for the takeover was to give existing investors money to attract and retain talented people through employee incentives. *

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