Alibaba’s share price plummeted in’Chinese antitrust investigation’

Enter 2020.12.25 11:40

The stock price of Alibaba, an e-commerce conglomerate, plunged 13% on news that it is being investigated by Chinese regulators. This is the biggest drop since listing.

On the 24th (local time), Alibaba stock, which was listed on the New York Stock Exchange, closed 13.3% down to $222. The closing price is the lowest since July. In the Hong Kong stock market, which closed earlier on the same day, Alibaba’s share price fell 8.13% to the lowest level in five months.

The bad news was that Chinese regulators said the day before they had launched an antitrust investigation against Alibaba. In an online statement, China’s antitrust regulator, the State Market Supervisory Authority (SAMR), said in an online statement that Alibaba would investigate the practice of asking sellers to agree on monopoly cooperation to prevent them from supplying products to competing platforms.

A fintech company Ant Group, an Alibaba subsidiary, has also become a target for regulatory authorities. In a separate statement, the People’s Bank of China announced in a separate statement that it would summon Ant Group, an Alibaba subsidiary, along with three regulators in the near future. The reason for the summons was to promote fair competition and protect the rights and interests of consumers.

The Chinese government is tightening regulations on IT conglomerates, starting with the sudden suspension of the Ant Group’s IPO in Shanghai and Hong Kong in November and announcing a draft antitrust regulation law. Some speculate that the incident was triggered by Ma Win, the founder of Ant Group, who criticized financial regulation practices as pawnshops in public.

Experts analyze that the policy of strengthening regulations will be a barrier to future growth for IT companies that have grown rapidly through the gap in which government regulations are being applied loosely compared to state-owned companies.