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(Bloomberg) – It turns out that even the most docile Chinese billionaires are not immune to the regulatory assault sweeping the world’s second-largest economy.
In a twist that has overturned conventional wisdom about the political pecking order of China’s business elite, the mild-mannered boss of Tencent Holdings Ltd., Pony Ma, has lost more paper wealth in the past nine months. as Jack Ma, the co-fighter. founder of Alibaba Group Holding Ltd. and Ant Group Co.
The reversal highlights how quickly Beijing’s crackdown has spread since authorities scuttled Ant’s initial public offering on November 3. – focus on unhindered growth for the benefit of other priorities such as data security, financial stability and reducing inequalities.
For most of China’s nine-month campaign to rule big tech, Tencent had seemed to fare far better than its nemesis, helped in part by Pony’s reputation for staying out of the limelight. ramp. While Alibaba has had to shell out a record $ 2.8 billion in antitrust penalties, regulators have imposed only token fines on Tencent for failing to seek approval in prior acquisitions and investments. . Its music branch was recently ordered to relinquish exclusive streaming rights, although it escaped the doomsday scenario of a business disbandment.
But a damning state report on Tuesday turned the tide. Tencent shares recorded their biggest intraday decline in a decade after a Xinhua-affiliated newspaper targeted the company’s key gaming activity, fueling speculation it could become Beijing’s next crackdown. . The rout left the company, whose market cap briefly touched $ 1,000 billion earlier this year, with a value of $ 550.5 billion.
Pony’s fortune has fallen nearly $ 14 billion since Ant’s IPO was suspended in November, falling to $ 45.8 billion on Tuesday, according to the Bloomberg Billionaires Index. He now ranks third on the rich Chinese list behind Jack, who has a net worth of $ 47.8 billion.
While state media toned down its language on games on Wednesday, helping to fuel Tencent’s more than 5% rebound, the stock is still down 17% for the year. The outlook will largely depend on what happens next with regulators, who shocked investors late last month with a crackdown on tutoring companies that will force many of them to become nonprofits.
Tencent is already preparing to appease Beijing, pledging to further limit playing time for minors and ban in-game purchases for younger players. The company also raised the possibility of the industry banning games altogether for those under the age of 12.
(Updates with details of regulatory measures in fourth paragraph)
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