Share prices for several major Chinese tech companies trading in Hong Kong dived on July 10th following Beijing’s imposition of penalties against several key market players, including online retail giant Alibaba.
Alibaba Group Holding Ltd. was one of several companies written up in the most recent executive punishment notices posted by the State Administration for Market Regulation against those that failed to declare compliance with government-mandated antitrust protocols in their most recent dealings.
The share price for Alibaba was down by 6.4%. Meanwhile, that of the Ping An Healthcare and Technology Company dropped by 4%, and Tencent Holding Ltd’s share price decreased by 2.7% Other tech companies whose share prices dove following the announcement were JD.com Inc., whose price dropped by 4.7%, and Meituan whose price went down by 5.5%.
This seemingly industry-wide plunge in share prices was directly influenced by a marked increase in executive penalty decisions made by the State Administration for Market Regulation against companies whose deals earlier this year and late last year were non-compliant with antimonopoly declaration guidelines. Among the deals singled out by the Administration were recent acquisitions by Alibaba and Tencent.
For the most part, affected Chinese tech companies were fined around $74,680 per noncompliant deal.
The Administration has also announced that additional names will be added to the penalty roster over the coming weeks.
Anti-monopolistic regulation has also done more to Alibaba than just decrease its share price in recent days. As of July 26th, the company amended its partnership terms to allow only its employees to be part of the Alibaba Partnership, which nominates most of the corporate board of directors members. Employees of Alibaba affiliates have also been deemed ineligible for membership based on the new ruling.
This also resulted in the removal of several executives of the Ant Financial Group from the Partnership, as well as Ant’s subsequent decoupling from Alibaba following the imposition of Beijing’s penalty decree.
Alibaba will, nevertheless, retain ownership of a third of the Ant Group.
The online retail giant also announced recently that it seeks to apply for a primary listing in Hong Kong’s Hang Seng Index, following a recent rule change in Beijing wherein Chinese tech companies with dual-class may apply for a primary listing in the former crown colony’s main economic index.