China’s Tech Titans Crumble At Xi’s Feet

Since peaking in October, Alibaba has now shed more than a quarter trillion in market value.

The company’s shares dropped another 8% in Hong Kong Monday, coming off a weekend during which Beijing instructed Ant Group to return to its roots as a payment processor and “rectify” a number of alleged infractions.

As one headline touted, Ant’s unicorn dreams have turned to nightmares.

Read more: Ant, Meet Sledgehammer

“Any doubts that Ant Group overstepped the mark are now laid to rest,” Tim Culpan wrote, in an opinion piece for Bloomberg.

“The new dilemma for the company’s management, and its bankers, is rewriting the narrative of the world’s biggest fintech giant,” he added.

While Alibaba is the poster child for Beijing’s crackdown, it’s not alone in suffering from China’s anti-monopoly blitz, which proceeded with a new sense of purpose after Jack Ma made the mistake of criticizing the Party at a now infamous October speech in Shanghai.

Between them, Alibaba, Tencent, Meituan and JD.com lost some $200 billion over just a pair of sessions, as scrutiny of Ma’s empire dragged down China’s tech titans.

The declines accelerated Monday. JD.com was the only name among the four to escape with losses of less than 5%.

Markets are now pondering an extremely uncertain future, as ambiguity around how far Beijing intends to go clouds the outlook.

Scrutiny of big tech is hardly a China-centric phenomenon. America’s tech titans are facing a wave of antitrust proceedings at home as well as ongoing inspection in the EU. But the absence of transparency in Beijing makes Xi’s anti-monopoly campaign potentially more worrisome.

Beijing is revising its antitrust laws as well as its regulatory framework for the fast-growing fintech industry, and at the risk of overstating the case, these companies have almost no real legal recourse in China. There’s nothing the Party can’t do if it wants to.

Over the weekend, The People’s Daily cautioned the tech industry that the pressure on Alibaba should be seen as a sign that Beijing is serious about the anti-monopoly effort. I tend to doubt Alibaba’s rivals needed the reminder. The writing on the wall could scarcely be any bigger.

In a futile effort to rescue the shares and shore up sentiment Monday, Alibaba upsized its buyback program to $10 billion from $6 billion. The market didn’t care. At all.