A news report Tuesday said that a $1 billion penalty on Ant Group's fintech unit could be reduced to $700 millions. This is another sign of the Chinese authorities easing restrictions on Alibaba Group Holding. BABA's stock rose initially, but then dropped on the news.
According to Reuters, the fine reduction will be announced within the next few months.
BABA shares, which had initially surged more than 2% in response to the news, have now retreated. Stocks fell 0.5% today to 95.95 in the afternoon.
China Regulators Quash Ant IPO
China first slapped the brakes on China's internet companies at the end of 2020.
This happened when Chinese authorities halted a planned initial public offering of $37 billion by Ant Group. Ant Group is controlled by Alibaba founder Jack Ma, who was the former chairman of the company. This was just one of the many restrictions placed on China's large internet companies.
These moves did not only target BABA, but also Tencent Holdings(TCEHY), JD.com(JD), and Baidu (BIDU), to name a few. China's authorities put restrictions in place to stop what they called monopolistic power by these companies and others.
Chinese regulators, however, said Ant Group could raise up to $1.5 billion in January for its consumer financing unit. This is widely viewed as an important step towards an eventual IPO. Ant Group is the company behind Alipay, a popular consumer finance application.
Ma's agreement to BABA stocks soared 13% after the news.
Alibaba shocked the Chinese tech industry on March 28 when it announced its plans to divide into six separate units. These units will be independent and free to raise money and consider initial public offerings.
Tencent Holdings, in addition to BABA's stock, fell 1.3% Tuesday to 42.61.
Baidu also fell 0.3% at 131.05, while JD dropped 1% to 37.70.