(Bloomberg) -- Ant Group Co.’s valuation may be cut further under new measures proposed by China to curb market concentration in its online payments market, according to new estimates from Bloomberg Intelligence.Jack Ma’s fintech giant may be worth less than 700 billion yuan ($108 billion) under the draft proposals, which could reduce the value of Ant’s Alipay service by half, according to senior analyst Francis Chan. Earlier this month, Chan lowered his Ant valuation to less than 1 trillion yuan, from about 1.44 trillion yuan.“Ant Group’s valuation may plunge further if its payment unit is forced to break up due to potential anti-trust probes by China’s central bank,” Chan wrote in a research note.The revised estimate for Ant is a far cry from valuations that ran as high as $320 billion before the company was forced to scrap its record initial public offering in November. China’s crackdown forced Ma’s firm to withdraw the $35 billion IPO just days before its planned listing in Hong Kong and Shanghai.China’s central bank said on Wednesday that any non-bank payment company with half the market share for online transactions, or two entities with a combined two-thirds share could be subject to antitrust probes.If a monopoly is confirmed, the central bank can suggest the cabinet impose restrictive measures including breaking up the entity by its business type. Firms already with payment licenses would have a one-year grace period to comply with the new rules, the central bank said.Alipay, with about 1 billion users, controls 55% of the mobile payments market. A break up could reduce its 600 billion yuan valuation in half, Chan said, adding it’s questionable whether Ant can relaunch its IPO this year.Alibaba Group Holding Ltd., which holds a stake in Ant, fell 2.5% in Hong Kong after rallying 8.5% on Wednesday after Ma emerged in public for the first time since China began clamping down on his businesses, ending several months of speculation over his whereabouts.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- He appeared for less than a minute and said nothing about the Chinese government clampdown that had left his business empire in crisis.But for investors who’d been waiting months to catch a glimpse of Jack Ma, the entrepreneur’s participation in a live-streamed video conference on Wednesday was enough to trigger a $58 billion sigh of relief. That’s how much Alibaba Group Holding Ltd.’s market value soared after a clip of Ma speaking to a group of teachers began circulating online -- his first public comments since disappearing from view late last year.Much about the future of China’s most famous businessman remains unclear. Yet analysts said Wednesday’s video was a sign that worst-case scenarios -- such as jail time for Ma or a government takeover of his companies –- are probably now off the table. It’s unlikely Ma would have participated in the event without at least tacit approval from Beijing; state-run media including the Global Times were among outlets that posted snippets of his talk or wrote stories about his appearance.“There’s still a lot of uncertainty on regulators’ next moves, but this does mean the status of Jack Ma is much better than a lot of people speculated,” said Fang Kecheng, a professor at the Chinese University of Hong Kong.Ma’s talk focused on philanthropic issues including the importance of narrowing income disparities and reviving China’s countryside, two big priorities for Xi Jinping’s Communist Party. While far from a mea culpa, the comments offered a stark contrast to Ma’s last public remarks in October, when the billionaire launched into an unusually strong rebuke of Chinese regulators and state-owned banks.Just a few days after that now-infamous speech at the Bund Summit in Shanghai, the government torpedoed Ma’s plan to take Ant Group Co. public in what would have been the world’s biggest-ever initial share sale. In the weeks that followed, authorities called for an overhaul of Ant’s business and began an antitrust probe of Alibaba.Few expect Ma’s change of tone will cause Beijing to back off its campaign to more tightly regulate Ant, Alibaba and the rest of China’s high-tech giants. But Wednesday’s market response suggests investors are beginning to price out the risk of a crackdown that would put the country’s richest entrepreneurs and most innovative companies in serious jeopardy.“Alibaba is not out of the doghouse, but at least it’s clear that the current anti-monopoly drive is not about punishing Jack Ma,” said Zhang Fushen, senior analyst at Shanghai PD Fortune Asset Management.Speculation about Ma’s whereabouts had intensified in recent weeks after it emerged that he skipped the recent taping of a Shark Tank-like TV program that he had created. Chinese authorities have in the past quietly detained billionaires that run afoul of the Communist Party.Ma’s resurfacing appeared to be carefully calibrated, according to Justin Tang, head of Asian research at United First Partners in Singapore. The video conference was part of an annual event Ma hosts to recognize rural teachers. A former English teacher himself, Ma spoke in a solemn tone about the need to create better education opportunities in China’s poorer areas.“Recently, my colleagues and I have been studying and thinking. We made a firmer resolution to devote ourselves to education philanthropy,” Ma said. “Working hard for rural revitalization and common prosperity is the responsibility for our generation of businessmen.”It was “the perfect setting for Jack to reappear in the public spotlight,” Tang said. “The backdrop sees Jack in his roots as a humble school teacher versus being a haughty entrepreneur that doesn’t know his place. The whole scene allows him to show contriteness without being scripted.”Ant, which is controlled by Ma and part-owned by Alibaba, confirmed the authenticity of the video but declined to comment further.Ant had suffered a “considerable shock” after Beijing suspended its stock market listing, an event that was expected to value the company at over $300 billion, said James Anderson, a partner at Baillie Gifford, a significant investor in Alibaba. “It’s plain that there are less chances of it being extraordinarily profitable than there were before,” he told Bloomberg TV.The big question facing investors now: to what degree will Beijing keep tightening the screws on Ant, Alibaba and its peers? The early evidence suggests regulators aren’t in a hurry to let up. Just a few hours after Ma’s reappearance, China’s central bank released draft rules to curb market concentration in online payments, potentially dealing another blow to Ant and rival Tencent Holdings Ltd.The move is part of a wide-ranging campaign to rein in a generation of Chinese tech giants that Beijing views as wielding too much control over the world’s second-largest economy.Despite the regulatory overhang, Alibaba bulls at firms including Amber Hill Capital Ltd. and Pegasus Fund Managers Ltd. said easing concerns over Ma’s status might be enough to lift shares of the e-commerce company back toward its record high in October. That would imply a gain of about 15% in the Hong Kong-listed shares from their close on Wednesday.Alibaba slipped 2.2% at 9:31 a.m. local time on Thursday.Mitchell Green, a founding partner of Lead Edge Capital who holds shares of Alibaba, expects Ma to focus primarily on charity work going forward, a shift that began a few years ago. Green said he’s still optimistic about the long-term prospects for both Alibaba and Ant. “Both are very important to China’s economy and its people,” he said.(Updates with quote from Baillie Gifford investor on Ant)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- China proposed measures to curb market concentration in its online payment market, potentially dealing another blow to financial technology giant Ant Group Co. and its biggest rival Tencent Holdings Ltd.The central bank said on Wednesday that any non-bank payment company with half of the market in online transactions or two entities with a combined two-thirds share could be subject to antitrust probes, according to draft rules released by the People’s Bank of China.If a monopoly is confirmed, the central bank can suggest the cabinet impose restrictive measures including breaking up the entity by its business type. Firms already with payment licenses would have a one-year grace period to comply with the new rules, the PBOC said.The rules present the strongest and most detailed message yet of regulators’ plans to curb monopolistic practices in the online payments industry. Ubiquitous in China, Ant and Tencent have transformed how consumers shop through their mobile apps that are used by a combined 1 billion people.The regulator also vowed “comprehensive” oversight of companies in the space, and their transactions with affiliated parties. It will step up supervision of any changes to shareholders or beneficiaries at payments firms, it said.“This shows there’s no let-up in regulatory tightening on the sprawling fintech businesses,” said Dong Ximiao, a researcher at Zhongguancun Internet Finance Institute. “The rules fill the void of defining market monopoly in China’s payments industry.”Alibaba Group Holding Ltd., which holds stake in Ant Group, fell 2.1% in Hong Kong as of 9:32 a.m. after rallying 8.5% on Wednesday. Tencent gained 2.9%.Regulators shocked markets in November by suspending billionaire Jack Ma’s record initial public offering of Ant as they stepped up oversight. Ant has since been ordered to overhaul its business and an antitrust investigation was launched into affiliate Alibaba Group Holding Ltd.While they’ve stopped short of directly asking for a breakup of Ant, the central bank has stressed that the company needs to “understand the necessity of overhauling” and come up with a timetable as soon as possible.Ma emerged in public on Wednesday for the first time since China began clamping down on his businesses, ending several months of speculation over his whereabouts. Global investors are still seeking clarity on what the future holds for the world’s largest fintech firm.Mobile payments are only part of what contribute to online transactions, but they have become the most important platform in China. Alipay, the app operated by Ant, held 55.6% of the mobile payments market as of the second quarter last year, according to internet consultant iResearch. Tencent had a 38.8% share.Room for growth in online payments is limited after years of a head-to-head rivalry between Ant and Tencent’s Wechat Pay. Total transactions were 59.8 trillion yuan as of June 30, up 8.8% from a year earlier, according to iResearch. That’s sharply down from increases of 23% and 65% during the same period in 2019 and 2018, respectively.(Updates with shares in the seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.