SINGAPORE – Growing regulatory control of Alibaba subsidiary and financial technology group Ant Group could be bad for China’s economy and China’s financial technology sector, says Andrew Collier, CEO of Orient Capital Research .
The long-awaited list of Chinese technology giant Ant Group, which is expected to be the world’s largest initial public offering, was abruptly suspended in November.
It came shortly after Chinese authorities interviewed Ant’s driver, Jack Ma, and other directors of the firm over regulatory issues.
“It’s true that when Jack Ma delivered his terrible speech … which upset many high-level politicians, I thought that would be a unique thing,” Collier told CNBC’s “Squawk Box Asia.”
He was referring to the Chinese billionaire’s speech in late October, where he appears to have criticized regulators during a controversial speech. Ma is the founder of Chinese e-commerce giant Alibaba, which has an approximate 33% stake in Ant Group.
Days later, Ant’s double listing in both Shanghai and Hong Kong was abruptly suspended, sending Alibaba shares plummeting.
“Clearly, this was an excuse on the part of management and probably state-owned banks to crack down on the entire fintech technology sector …,” Collier said. “Part of that is legitimate because of concerns, you know, about the possibility … of a financial crisis. But they had already cut Ant Financial’s wings in pretty serious ways.”
It is not good for the future of fintech or for the future of the Chinese economy
Andrew Collier
General Manager, Orient Capital Research
Problems for both Alibaba and Ant have only increased since Chinese authorities announced an antitrust investigation into the e-commerce titan last week. Recently, Chinese regulators ordered Ant Group to rectify its business.
These developments caused Hong Kong-listed shares to suffer a further drop: with more than 831 billion Hong Kong dollars (approximately 107 billion dollars) of its market capitalization ended in just two sessions, according to CNBC calculations.
Collier said the regulatory scrutiny surrounding Ant was probably focused on both the desire to protect the Chinese consumer and politics.
“I initially believed in the line that the (People’s Bank of China) was trying to protect the consumer,” the analyst said, citing past challenges in the peer-to-peer lending space.
“Now, as they become so serious and file new complaints and are told to reduce large areas of their business, it is clear that it is partly a political goal to reduce the size of these companies so that they do not have significant market share and threaten the existence of the state system, ”he added.
“It’s not good for the future of fintech or for the future of the Chinese economy,” Collier said.