Alibaba, Meituan dent Hong Kong stocks after report on Ant Group break-up reignites regulatory worries

Hong Kong stocks slumped on heightened regulatory concerns after a news report saying the Chinese government will separate Ant Group’s online payments and lending businesses. Soho China crashed after Blackstone cancelled its takeover offer.

The Hang Seng Index tumbled 1.5 per cent to 25,813.81 on Monday, following a rally in the preceding three weeks. Alibaba Group Holding, which owns one-third of Ant Group and this newspaper, lost 4.2 per cent while Tencent Holdings declined 2.7 per cent and Meituan slid 4.5 per cent. The tech gauge retreated by 2.3 per cent.

China is looking to break up Ant Group’s Alipay and force the creation of a new app for its loan business, the Financial Times reported, citing people familiar with the process. Ant Group will be asked to turn over lending data to a new credit scoring venture partly owned by the state, it added.

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“Regulatory measures are still impacting the market,” said Alvin Cheung, associate director at Prudential Brokerage in Hong Kong. The Hang Seng will fluctuate around 25,000 this month, while performance of tech stocks will diverge, he added.

The Ministry of Industry and Information Technology on Monday ordered tech companies to unblock rival links, adding another blow to investor sentiment. Other tech stocks also declined. Alibaba Health Information Technology fell 4.8 per cent and lost 2.5 per cent.

Soho China plunged about 35 per cent to HK$2.29. US private equity giant Blackstone Group on late Friday walked away from its US$3.05 billion, or HK$5 per share, takeover offer in June for the biggest developer in Beijing amid a regulatory review. Both parties cited no progress in fulfilling the conditions towards its December deadline.

Gaming stocks were also among the biggest losers as China reported 22 local Covid-19 infections on Sunday, dampening hopes for wider reopening of mainland-Macau borders. Sands China fell 5.5 per cent and Galaxy Entertainment lost 5.1 per cent.

The Shanghai Composite Index climbed 0.3 per cent to 3,715.37, from a six-year high. The market’s strength has been powered by a trading blitz reminiscent of the liquidity that propelled the bull market in May 2015. The tech-heavy ChiNext declined 1.2 per cent.

Four new listings in the mainland market surged. Shanghai Labway Clinical Laboratory jumped 338 per cent to 18.27 yuan while Jinsanjiang Zhaoqing Silicon Material soared 267 per cent to 29.70 yuan. Guangzhou Hexin Instrument rallied 425 per cent to 93 yuan and HHC Changzhou Corp rose 18.5 per cent to 86.15 yuan.

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