Following the recent request for Internet platform companies to “know the fear and rules”, the mainland’s regulatory storm over science network companies continues to ferment, with foreign media citing sources revealing that the People’s Bank of China is now trying to gain control of the massive amount of customer lending data from Alibaba’s (09988) Ant Group, and Ant is “fighting” to keep the golden egg. Although Ali shares closed up 1.35% on Friday, but the market is concerned that excessive government intervention is not only detrimental to Ant’s valuation, but also the risk of stifling innovation.
Ant currently has the largest consumer credit data on the mainland, with more than 700 million monthly users of its mobile payment application (App) Alipay, and data on two-thirds of China’s population, many of whom are young, without credit cards or sufficient bank credit history, and 80 million merchants.
It is rumored that the People’s Bank of China wants Ant to hand over its data, mainly consumer credit information, to a state-owned credit rating company, which will then share it with state-owned banks such as Industrial and Commercial Bank of China (01398), Bank of China (03988), Construction Bank of China (00939) and Agricultural Bank of China (01288). The report points out that mainland banks have been dissatisfied with Ant not having to accept the strict regulatory requirements on par with traditional financial institutions, which has contributed to the enterprise “ants alone”, disguised as eating into the market share of banks in payments and lending.
The country’s credit rating company, reportedly managed by a former top official of the People’s Bank of China, also provides services to other state-owned banks and financial institutions, including Ant’s competitors in the lending business. Ant believes that the credit rating company should be led by Ant itself, and is “keen to keep the most valuable business,” but PABC believes this would constitute a conflict of interest, so the two sides have not reached a decision.
More importantly, the data is Ant’s most valuable asset, and if it loses its dominance, it will affect its future listing valuation. The foreign media who broke the story of Ant and PABC “talking numbers” also quoted a banker who worked with Ant as saying that excessive government intervention might slow down the growth of the industry. Some foreign newspapers also cited scholars pointed out that the “nationalization” of data would reduce the incentives for a number of science and technology companies to pursue innovation.
As early as March this year, foreign media also reported that Ant had agreed to share some of its 500 million loan customers’ data with a state-owned database, but the Bank of China considered that Ant only shared a very small amount of data, which is not very helpful for risk management, so it did not “receive” the goods. In fact, the market also sees the digital renminbi being promoted by PBoC on a pilot basis as a means of sharing transaction data with the mobile payment platform of the science enterprise.
Facing external problems, Ant itself also has internal worries, the company’s money fund balance of the first quarter earnings report showed that the net asset value of 972.4 billion yuan (RMB 1.5 billion), a sharp decline from the same period last year. The same below), a significant decrease of 18.3% over the same period last year, but also since 2017, the asset size fell below 1 trillion yuan for the first time. Industry analysis shows that one of the reasons is that some investors reduced their money funds because of the previous strong A-shares and transferred their funds to other money funds or wealth management products. Fitch analyst Li Huang expects the size of balance funds to continue to decline in the next few quarters, but the rate of reduction will slow down.
In fact, limiting the balance of BalancePay, as well as bringing the financial business into the financial holding company to be regulated, is part of Ant’s overhaul, as well as disconnecting the lending products “chanting” and “borrowing” from Alipay, and almost all of these named businesses are These businesses are almost all of Ant’s most profitable “golden eggs”.
In addition, the Ministry of Industry and Information Technology of the mainland also notified 138 App infringement of user rights and interests, Tencent App Store, Xiaomi App Store, OPPO Software Store, Huawei App Market and Vivo App Store found that the number of problems accounted for more than 10%, and said that the relevant platform companies have been urged to carry out comprehensive rectification.
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