Following news that founder Jack Ma was giving up control of the business’s digital payments division, shares in the world’s largest online retailer, Alibaba, declined for the third day in a row.
The Wall Street Journal reported on Thursday that Ma’s as-yet-unannounced plans to relinquish control of Ant Group are a part of a plan to placate Chinese regulators and resurrect Ant’s initial public offering.
Alibaba’s gains from earlier in the week when the company revealed it would seek a primary listing in Hong Kong to better access China’s enormous pool of investors were erased by reports regarding Ma’s choice.
The Hang Seng Tech Index’s biggest decliners included Alibaba shares, which ended Friday’s trading session in Hong Kong down 6.1 percent and 11 percent from Tuesday’s close.
Ma’s rumored action would be a part of a protracted reorganization process under the direction of the state after Ant’s anticipated 2020 share sale, which would have been the largest IPO in history at the time, was abruptly abandoned.
Despite significant changes at Ant, Beijing denied last month that it had begun talking about possibly resurrecting Ant’s IPO.
There were worries that Ma’s choice might postpone Ant’s timeline for going public, according to Kenny Wen, head of investment strategy at KGI Asia in Hong Kong, who spoke to Bloomberg.
If there is a change in the major shareholding structure within three years, it is challenging for A-share businesses to win clearance, according to Wen.
Amidst a slowdown in China’s economy and intense competition, Alibaba is anticipated to disclose its first-ever negative quarterly revenue growth the following week, according to Bloomberg.
When the company released its results in May, it did not provide a full-year revenue prediction, citing pandemic-related concerns.
Beijing’s regulatory onslaught on the digital industry, which started in late 2020, focused suspected anti-competitive acts and resulted in a record $2.75 billion fine for Alibaba, which is still in shambles.
Ant did not reply right away when AFP asked for comment.