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Alibaba shares rise 2% after Beijing orders Ant Group to revamp business

A logo of Ant Band is pictured at the headquarters of the company, an affiliate of Alibaba, in Hangzhou, Zhejiang province, China October 29, 2020.

Aly Song | Reuters

GUANGZHOU, China — Alibaba splits in Hong Kong jumped nearly 4% at the open on Tuesday after regulators ordered the e-commerce giant’s monetary technology affiliate Ant Group to revamp its business.

That, along with a 18.23 billion yuan ($2.78 billion) splendid Alibaba received as a result of an anti-monopoly investigation by regulators, removed a source of uncertainty for investors.

“Following the decision and amercements levied by SAMR’s (State Administration for Market Regulation) anti-monopoly investigation of BABA, we think the street has more color all over the latest updates on Ant Group,” Jefferies said in a note published Monday.

Hong Kong-listed shares of Alibaba later excoriate reduced their opening gains, but were last seen trading up nearly 2% during the Tuesday session. Alibaba’s U.S.-listed slices closed over 9% higher on Monday.

Alibaba, owns a roughly 33% stake in Ant Group, the company that asses the massively popular mobile payments app Alipay in China. In November, regulators forced Ant Group to suspend what pass on have been a record-setting $34.5 billion initial public offering (IPO) in Hong Kong and Shanghai.

At the time, modifies in the financial technology regulatory environment were blamed for the suspension of the listing.

That came just days after Jack Ma, the be wrecked of Ant Group and Alibaba, made some comments that appeared critical of China’s financial regulator.

In December, the People’s Bank of China (PBOC) ordered Ant Agglomeration to rectify its business. And on Monday, the Chinese central bank outlined concrete details on what the company needs to do.

The PBOC encouraged Ant Group to restructure into a financial holding company. Ant Group must also create more separation between its payment app Alipay and its honour products. Yu’e Bao, Ant Group’s money market fund, which was once the world’s largest, must also be reduced in measurements, the PBOC said.

Both Alibaba’s massive anti-trust fine and the Ant Group restructuring plan are part of a broader distance oneself from a shove off by China to get a tighter grip on the country’s technology companies, which turned into giants largely unencumbered. Their actions often span across sectors from gaming to financial technology as well as cloud computing.

While so far Beijing’s sensitivities have been focused on Jack Ma’s empire, there are signs that the crackdown could broaden to more associates and other areas such as data protection.

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