China's clampdown on big tech puts more billionaires like Jack Ma on notice

 

Wednesday's selloff sent Alibaba shares down 7%, while analysts estimated that Ant's $280 billion valuation could be cut in half due to stricter regulations. Both companies were co-founded by Jack Ma.

Xi Jinping’s Communist Party stepped up efforts to rein in some of China’s most powerful companies, jolting investors and dealing a blow to the country’s richest entrepreneurs.

Beijing on Tuesday unveiled regulations to root out monopolistic practices in the internet industry, seeking to curtail the growing influence of corporations like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. The rules, which sent both stocks tumbling over two frenetic days and sparked a wider selloff in Chinese equities, landed about a week after new restrictions on the finance sector triggered the shock suspension of Ant Group Co.’s $35 billion initial public offering.

While Xi’s government has been steadily tightening its grip on the world’s second-largest economy, it has until recently taken a relatively hands off approach toward businesses that dominate China’s burgeoning internet, e-commerce and digital finance industries. Authorities are concerned the companies have become too powerful, according to Ma Chen, a Beijing-based partner at Han Kun Law Offices.

“This is a watershed moment,” said Ma, who specialises in antitrust.

Alibaba, Ant and Tencent alone commanded a combined market capitalisation of nearly $2 trillion before last week, easily surpassing state-owned behemoths like Bank of China Ltd. as the country’s most valuable companies. Wednesday’s selloff sent Alibaba shares down another 7% to its lowest since August in Hong Kong, while analysts have estimated that Ant’s $280 billion valuation could be cut in half due to stricter regulations. That’s after Alibaba’s 5% decline Tuesday. Both companies were co-founded by billionaire Jack Ma, China’s most celebrated businessman.