Pony Ma’s Tencent Holdings has been put on notice. Asia’s largest conglomerate was censured by China’s antitrust watchdog on Friday as Beijing expands a crackdown that began with Jack Ma’s online empire.
The token fine is just the beginning. China’s top financial regulators see Tencent as the next target for increased supervision after the clamp down on Jack Ma’s Ant Group, according to people with knowledge of their thinking. Like Ant, Tencent will probably be required to establish a financial holding company to include its banking, insurance and payments services, said sources in the know.
The two firms will set a precedent for other fintech players on complying with tougher regulations, the people added.
Such a move would mark a significant escalation in China’s campaign to curb the influence of its technology moguls, days after Premier Li Keqiang pledged at the National People’s Congress to expand oversight of financial technology, stamp out monopolies, and prevent the “unregulated” expansion of capital.
“We will continue to adapt to changes in the regulatory environment, which we view as beneficial to the industry, and will seek to ensure full compliance,” Tencent said in an emailed statement following the fine by the antitrust watchdog. The company declined to comment on financial regulatory matters.
The China Banking and Insurance Regulatory Commission didn’t immediately respond to a request seeking comment. Tencent has already seen collateral damage from the new regulations, though investors had shrugged this off, pumping up the stock even as Alibaba was punished. Its 26 per cent advance over six months contrasts with a 15 per cent slump for Jack Ma’s e-commerce behemoth, which owns a third of Ant. Shares of Tencent climbed to a record on January 25, valuing it at roughly $950 billion. The stock fell 4.4 per cent in Hong Kong Friday. Shares of Tencent investor Naspers and its unit Prosus also declined. Spreads on Tencent’s 2.39 per cent dollar bond due 2030 widened 9 basis points, while notes issued by fellow Chinese tech giants including Meituan and JD.com also weakened, according to traders.
Regulator fines 12 firms
China's market regulator said Friday that it fined a dozen companies, including games company Tencent Holdings and Chinese search engine firm Baidu, for not disclosing past deals as authorities step up anti-monopoly scrutiny in the internet sector.
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