Chinese companies take a hit of $200 billion after action against Alibaba Group

Beijing: – The Chinese government has indicated to increase the scope of actions initiated against the Alibaba Group, the largest e-commerce company in the world. This news has created a sensation in the Chinese stock markets. The IT companies have taken a hit of more than $200 billion; the highest losers are leading companies like Tencent Holdings and JD Dot Com.

The Chinese central bank issued a notification indicating action against jack Ma’s Alibaba Group and Ant Group. The People’s Bank of China has instructed that the Ant Group should stop all businesses, restricting their activities only to ‘Payment Services’. Before this, in the last week, the Chinese agency State Administration for Market Administration raided the headquarters of Alibaba group.

Actions against this company, valued at more than $500 billion on the international level and an icon of Chinese domination in the information technology sector, have created a sensation. Intense repercussions were felt in the Chinese stock markets and it has created confusion in the investors. The shares of the leading Chinese companies from the information technology sector, crashed anywhere between 2% to 8% and the estimated losses are pegged at $200 billion.

This is the second action taken against the Chinese billionaire Jack Ma. In the last month, Jack Ma had made a statement criticising the banking regulation system and functioning of the big banks. He had claimed a resistance from the banks and related agencies to accept novel concepts and take risks. Ant Group had to pay the price for his statements. The company had to withdraw an IPO worth billions of dollars from the Shanghai and Hongkong stock markets.

This new action brings the tension between the private sector and the government in China on the anvil. Chinese ruling communist party wants to control every sector and does not want the factors challenging the control to become stronger. Therefore, the increasing influence of an entrepreneur like Jack Ma has strongly offended the Chinese rulers and it is clear that this new action is a part of the efforts to stop him.