Market rumors are that Tencent will be the next target of the Chinese Communist Party‘s regulation, and its market value evaporated 270 billion yuan.
On March 12, Tencent’s stock price took a big dive at the end of the trading session, plunging about 225.4 billion (RMB, same below) in one hour. Sources said that Tencent Holdings may become the next target of the CCP’s financial regulation, following in the footsteps of Alibaba.
According to brokerage China news, Tencent Holdings suddenly killed the market starting after 3 p.m. Beijing Time on the 12th, with the biggest intra-day drop close to 5%, closing with a 4.41% plunge. Counting from 568 yuan before the dive, Tencent ended the day evaporating about 225.4 billion yuan in one hour.
As for the reasons for the sudden drop in Tencent’s share price, news indicated that one of them was the sudden move by the General Administration of Market Supervision of the Communist Party of China (GAMSC), which made administrative punishment decisions on ten cases of implementation of operator concentration in the Internet sector, including the cases of Tencent Holdings’ acquisition of equity in Ape Coaching, Baidu Holdings’ acquisition of equity in Little Fish Group and the establishment of a joint venture between Shanghai Oriental Newspaper and Beijing Quantum Leap Technology, and imposed a fine of RMB 500,000 on each of the 12 companies involved. A fine of RMB500,000 was imposed on each of the 12 companies involved.
In addition, there is news that Tencent Holdings may become the next target of financial regulation after Alibaba. Bloomberg’s news on the 12th suggests that the symbolic fine may be just the beginning. People familiar with the matter said Tencent could be the next target of financial regulation.
After the regulatory crackdown on Ant Group, Tencent was seen as the next target by the Communist Party’s top regulator, people familiar with the matter said. Like Ant Group, Tencent could be required to set up a financial holding company that would include its banking, insurance and payment services. The two companies would serve as a model for other fintech companies in complying with stricter regulations.
Tencent’s fintech business will generate about 84 billion yuan in revenue in 2019, accounting for 22 percent of total revenue, making it the biggest revenue driver after online entertainment, according to the data. WeChat Pay holds nearly 40 percent of China’s mobile payments market, second only to Alipay, according to data from Avery Consulting.
Faced with strong regulation from the Communist Party, Tencent said in an emailed statement that it matched the authorities’ regulation: “We will continue to adapt to changes in the regulatory environment, which we believe are beneficial to the industry, and will seek to ensure full compliance.”
Under the strong CCP crackdown, Ant Group will set up a financial holding company, incorporating all its businesses, including technology products in areas such as blockchain and Food delivery, into the holding company, subject to tough regulation by CCP regulators and meeting appropriate capital requirements, and Ant Group will move from being a “financial technology company” to a “financial holding company. “The CNN article said the move shows that even if the Communist Party does not kill Ant Group, it will become a Boring Bank in the future.
Recent Comments