China’s financial regulators imposed a fine of Rmb7.12bn on Ant Group for various violations, including those related to financial consumer protection, payment and settlement. The development marks the end of the nearly three-year regulatory tightening in China’s platform economy. The regulators also imposed Rmb2.99bn fine on Tencent’s Tenpay.
The move came after repeated calls from the State Council for the promotion of a healthy development of China’s platform economy. In addition to ending Tencent’s probe, regulators and governments recently have taken various actions. Some examples:
- PBOC pledged to implement financial measures to support a healthy development of platform economy and promote innovation in fintech
- Zhejiang province introduced measures on July 5 aimed at boosting high-quality development of platform economy
We expect the market to react positively to the news, as 1) it signals that the policymakers are following through on recent pro-growth pledges to support the platform sector and private economy, 2) Ant’s case provides more clarity on regulatory boundaries for platform operators, which is critical for restoring their confidence.
We expect further gains in large internet stocks names like Alibaba and Tencent following Friday’s advance, as the conclusion of the rectification process removes a long-lingering overhang. Sectors that have faced regulatory scrutiny in the past few years may also benefit from the expectation of easier regulatory environment, such as fintech and education