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Several Ant-linked firms experienced a notable increase in the value of their shares after a Ma organizational development.
The shares of Ant-linked firms jumped Monday on news that Ant Group founder Jack Ma is ceding control of the fintech giant. The Hong Kong-listed shares of Ma’s Alibaba Group closed 8.7% higher, while the shares of other Ant-staked companies also rose. The Alibaba Group affiliate company indirectly owns between 5%-20% stake in firms such as Longshine Technology Group, Jilin University Zhengyuan Information Technologies, and Shanghai Golden Bridge Infotech. Ant also has part ownership in Orbbec Inc and Hundsun Technologies.
Ant revealed over the weekend that Ma would give up company control following an overhaul. This overhaul seeks to establish a line under a regulatory crackdown that came about soon after the preemption of Ant’s massive stock market debut two years ago.
Greater China market strategist at Hong Kong’s Saxo Markets, Redmond Wong, weighed in on Ma ceding control of Ant. According to Wong, this development should help clear some uncertainties and chart a new path for developing and expanding the group’s business. As Wong put it:
“It should have removed some of the authorities’ concerns about the group as the change was likely a negotiated outcome with the authorities. And investor sentiment towards the China Internet sector is likely to improve further.”
Furthermore, Managing Partner at Shanghai-based investment consultancy Aquariusx, Alexander Sirakov, also commented, saying:
“Investors can stop guessing and can finally assign a risk premium to the new company that Ant was transformed to be.”
Some analysts opine that relinquishing control would pave the way for Ant to revive its failed initial public offering (IPO). However, the changes announced Saturday suggest that there might be a further delay due to listing regulations. Furthermore, Ant stated Sunday that it had no plans to initiate an IPO.
Chinese Finance Regulatory Head Provides Correction Update Amid Ant-linked Firms Shares Climb
Meanwhile, Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC), also commented amid the rise in Ant-linked firms’ shares. In a recent interview, Guo said that the correction of some platform companies’ financial businesses is basically complete. Although these companies currently total 14, Guo refrained from naming any of them. Instead, he stated that a few outstanding issues present among these companies require a resolution.
Guo concluded that the authorities will adopt normalized regulation in light of the previously mentioned rectifications. He further said that these authorities could also encourage platform companies to operate compliantly.
In a research note, banking giant Morgan Stanley said it would elevate Alibaba to the summit of its China internet stocks for 2023. The New York-based banking powerhouse cited easing regulation as a critical reason for its decision.
Despite a change of guard at Ant’s control center, Shanghai Jiao Tong University finance professor Li Nan doubts little will change. According to Li, the fintech’s inherent problems still hold sway even after it changes control.