Alibaba’s Ant Group Accepts Fine, Could An IPO Be Next, Week In Review

Week In Review

• June’s Caixin PMI came in slightly better than anticipated at 50.5 versus an expected reading of 50 and May’s 50.9.
• BYD gained +4.48% after selling 253,046 cars, which brings their first-half total to 1.25 million, with several new models coming out later this year. NIO gained +8.11% after selling 10,707 vehicles, Li Auto gained +8.49% after 32,575 sold, Xpeng gained +16.5%, Geely Auto gained +6.28%, Guangzhou Auto gained +6.42%, and Great Wall Motors gained +7.47%.
• Janet Yellen visited China amid discussions on limiting Chinese companies’ access to US cloud services providers, and China’s Ambassador Xie Feng met with President Biden at the White House over the weekend.
• Hong Kong-listed bank stocks had a very tough week for multiple reasons, which weighed down the broader markets.

Friday’s Key News

Asian equities ended a down week lower in advance of US employment data this morning.

This morning, US pre-market open, Reuters reported that the PBOC fined Ant Group $984 million (RMB 7.12 billion). Ant’s pulled IPO was due to their IPO prospectus not incorporating the effect of the soon-to-be-released regulation of the company and fintech peers. The pulled IPO had nothing to do with Jack Ma’s criticism of government regulators. Could news surrounding the company that marked the high water mark in the China internet industry also mark the bottom? Fingers crossed as it reminds me of the Allman Brothers Band’s song “Back Where It All Begins.” The Ant fine means an IPO could be on its way, which should help Alibaba monetize its 33% ownership. The rumor lifted Alibaba’s HK share class by +3.44% in one of the few bright spots for Hong Kong stocks today. Mainland financial media noted a statement from Ant Group stating, “After receiving the administrative penalty decision from the financial management department, we sincerely accept and resolutely obey this, and will further strengthen the level of compliance governance.”