Shares of Alibaba Group and Tencent rose in Hong Kong on Monday after Chinese regulators imposed a $2.8 billion fine on Ant Group and appeared to signal an easing of the crackdown on the country's tech sector.
The $2.8 billion fine on Ant Group, the fintech affiliate of Alibaba, comes with conditions that would allow Ant to restart its business after the abrupt suspension of its record-breaking $37 billion IPO in 2020. China then launched an anti-monopoly crackdown that shook the entire Chinese tech industry.
The penalty and indications that Chinese regulators will shift their focus to overall industry regulation rather than targeting individual firms have boosted optimism for Alibaba and Tencent, helping their shares outpace gains in the broader Hong Kong stock market.
However, analysts question whether Ant Group will revive its IPO plans anytime soon. While Ant Group says the share buyback that values the firm at about $88 billion is aimed at providing liquidity and employee incentives, an IPO could have achieved those goals more effectively. This suggests an IPO remains off the table for now.
