Ali Hasan
We all know Jack Ma. He was once the richest person in China but recently things haven’t been that great for the founder of Alibaba as his net worth has reduced by $11 billion in just 2 months.
The Chinese Government has stepped up scrutiny of his empire. The 56-year-old former English teacher often associated with the meteoric rise of China’s internet sector reached a peak net worth of $61.7 billion this year and was supposed to regain the title of Asia’s wealthiest person.
But he has now slipped to 25th on the Bloomberg Billionaires Index with a reduced net worth of $51.2 billion at the time of writing this blog.
Jack Ma’s problems began just as he was preparing to take payments company Ant Group Co. public. Instead, Chinese regulators pulled what would have been the world’s largest IPO just 2 days before its scheduled debut in November. The IPO was expected to be around $35 billion.
While he has been at the center of the clampdown, he isn’t the only one feeling the squeeze. Increased government scrutiny is forcing investors to rethink their holdings after the explosive demand for online services brought by coronavirus lockdowns sent those stocks surging earlier this year.
In recent weeks, China’s tech giants have lost hundreds of billions of dollars in market value. Pony Ma’s Tencent Holdings Ltd. has dropped 15% since early November and Wang Xing’s food delivery giant Meituan is down by almost 20% from its peak last month. Alibaba’s American depositary receipts have declined more than 25% since late October.
In the first week of November, just when Ma was days away from the IPO of his big fintech giant, the Ant Group which had been pre-valued at $280 billion and was expecting to list at over $300 billion, his top executives were summoned by the Chinese regulators and told to stop the IPO proceedings over compliance issues.
The reason this is happening is because Jack Ma became a superstar in China and everything he touched turned to gold, which was a problem due to the vast inequality China is witnessing. Over 60 crores people in China live on less than $150 a month, at a time when China has more billionaires than the US and India combined.
While consumption per capita has declined by 5% in China, spending on luxury goods has risen by 50%. So the rich got richer and the poor got poorer.
The Chinese Communist Party did not like this disorderly expansion of capital, and told Jack Ma that he was getting too big. Many believe President Xi Jinping is taking China back to 1950s-style communist control. Many believe that Xi did not like anybody becoming too big or acquiring a voice.
So the logic is that “you can do your business, but you should always know that the party is superior”. So, “Xi-nomics” is a new kind of state capitalism that the Chinese president wants to have in China.
Only time will tell what will happen to Jack Ma. The big question still remains unanswered – Will he ever be allowed again to list his company at the stock market or not? All we can do is wish the best for everyone as 2020 hasn’t been great to most of us.
Not even billionaires were spared this time.
