Ant Group got a sudden reminder of the regulatory risk it faces just days before the company’s shares begin trading in Shanghai and Hong Kong on Thursday.
Ant Group got a sudden reminder of the regulatory risk it faces just days before the company’s shares begin trading in Shanghai and Hong Kong on Thursday, and analysts say the fintech giant’s long-term growth may be tempered by the government’s mounting scrutiny. Billionaire cofounder Jack Ma and other senior executives were summoned on Monday to a joint meeting held by four top financial regulators that included the country’s central bank, the People’s Bank of China, and the China Securities Regulatory Commission (CSRC), according to a brief post on CSRC’s website. While neither side disclosed details of the discussion, analysts say the development signals growing worries of potential risks associated with the rapid expansion of Ant’s lending business. “China’s financial system is in the phase of strengthening regulation and controlling risks,” says Zhu Ning, a professor of finance at Shanghai Jiao Tong University. “Ant Group’s business may not be entirely in line with what regulators want.” For example, Ant has made partnering with Chinese banks a centerpiece of its growth strategy. The Hangzhou-based company works with lenders to extend consumer credit through the use of technologies like its risk-control software, charging the banks a percentage of the interest income generated.
