Regulators in China have initiated an anti-monopoly investigation into Alibaba (NASDAQ: BABA), bringing yet another major challenge to the e-commerce giant.
Fundamental analysis: The crackdown continuesChinese regulators announced an investigation against Jack Ma’s company over alleged monopolistic practices. Alibaba’s fintech affiliate, Ant Group, was also summoned by the People’s Bank of China, China Banking Regulatory Commission, and China Securities Regulatory Commission and State Administration of Foreign Exchange, for “supervisory and guidance” talks.
Ant Group, the owner of the largest digital payment platform Alipay, stated it would “diligently study and strictly comply with regulatory departments’ requests”.
The e-commerce company has already been warned by Chinese regulators for asking merchants to sign exclusive cooperation agreements which keep them from providing their products and services to other platforms.
Attempts to prevent monopolistic and anti-competitive practices are “requirements for improving the socialist market economy system and promoting high-quality development”, said the editorial in the People’s Daily.
“This investigation does not mean that the country’s attitude towards the encouragement and support of the platform economy has changed.”
It appears that China is determined to curb the fast-growing dominance of tech giants in China such as Alibaba and Tencent.
China has recently prevented Ant Group from launching its initial public offering, which was supposed to be the largest in history. While some reports said the halt happened due to certain adjustments in the financial technology regulatory world, analysts believe it was a warning to Jack Ma who publicly spoke against Chinese regulators.
Technical analysis: Sharp move lowerAlibaba stock price crashed over 13% on Thursday to revisit levels last seen in early June. The price action traded about 16% lower at one point, before the buyers were able to defend an important zone around the $210.00 mark.
Apple stock daily chart (TradingView) In case a recovery starts in the next week, the first targets on the upside for BABA investors are $230.00, $246.20 (the 200-DMA), and $252.00.
SummaryChinese regulators have started an investigation into Alibaba over potential monopolistic and anti-competitive practices, sending the e-commerce company’s shares down by more than 13%.
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