Alibaba and Tencent shares rise as investors expect end to China's tech crackdown

Shares of Alibaba and Tencent rose after China's $984 million fine against Ant Group seemed to signal the end of a regulatory crackdown on the nation's technology sector.

Following the fine on Friday, an affiliate of Alibaba announced a share buyback that valued the fintech at 75% less than what was claimed in a scrapped initial public offering (IPO) plan, but was seen as giving investors liquidity and certainty.

When Ant's IPO was abruptly shelved in late 2020, it signaled the beginning of a broad crackdown by Beijing on sectors that ranged from technology to education as regulatory authorities sought to assert their control over what they perceived to be excesses and unethical behavior resulting from years of runaway growth.

The investigation caught companies like online retail giant Alibaba, gaming company Tencent, and food delivery group Meituan in its net and forced both established businesses and startups to operate in an uncharted, unsettling environment. Share prices were decimated by billions.

Along with Ant, the Chinese government revealed on Friday that Tenpay, an online payment service owned by Tencent, had been fined nearly 3 billion yuan ($414.88 million) for violating rules regarding customer data management, among other things.

The majority of the significant issues affecting platform companies' financial businesses have been resolved, according to the People's Bank of China (PBOC), which stated that regulators would now switch their attention from regulating individual companies to the entire industry.

Alibaba, which owns a 33% stake in Ant and spun it off 11 years ago, said on Sunday that it was debating whether to take part in the buyback that would convert shares into an employee incentive plan.

On Saturday, Ant announced that it had made an offer to all of its stockholders to buy back up to 7.6% of its equity interest for a price that corresponded to an estimated $78.5 billion group valuation.