As China continues its regulatory onslaught that is quaking its tech industry and shedding billions of dollars off its economy, the sweeping effect is now catching up with Chinese billionaires.
Alibaba and Ant Group cofounder, Jack Ma, was the first to feel the impact of the crackdown, losing billions of dollars in personal wealth. Now, Tencent’s boss, Pony Ma, has been caught in the financial crossfire. Bloomberg reported that the mild-mannered boss has lost more paper wealth over the past nine months than Jack Ma.
Beijing’s regulatory onslaught has spread across many sectors of China’s tech economy since last year when it halted Ant’s proposed IPO that would have seen the company topple Saudi Aramco record as the company with the largest IPO in the world.
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Of many Chinese companies caught in the regulatory web, Alibaba and the Ant Group were the most affected. Alibaba had to pay up to $2.8 billion in fines and penalties, while Tencent received a token fine for not seeking approval during past acquisitions and investments. Though Tencent got into trouble again, and was ordered to give up exclusive streaming rights, it still has a better treatment compared to others.
However, as other companies get hit by China’s crackdown, Tencent’s share of the misfortune increases. On Tuesday, a Xinhua-affiliated newspaper took a dig at Tencent with the claim that its gaming business could be the next on Beijing’s crackdown list. The news sent the company’s shares crashing as Tencent posted its biggest intraday decline in a decade. Tencent’s value dropped to $550.5 billion from nearly $1 trillion it has reached this year.
Following the decline, Pony’s net worth recorded further plunge. Bloomberg Billionaire Index noted that his fortune has dropped by almost $14 billion since the Ant IPO was suspended in November, falling to $45.8 billion on Tuesday. He is now the third richest person in China, behind Jack Ma.
Bloomberg noted that while state media toned down their language on gaming Wednesday, helping fuel a more than 5% rebound in Tencent, the stock is still 17% lower for the year. With Beijing not ready to stand down yet, the outlook of the stocks will be determined by what regulators do next.
Tencent has been compliant with regulators and promised to make amends where necessary, including limiting play time for minors and forbidding in-game purchases for the youngest players. Bloomberg’s report said that the company also broached the possibility of the industry banning games altogether for those under the age of 12.
However, uncertainties still cloud the future of Chinese tech companies and their billionaires as the government prioritizes national security, control, financial stability and equality.
China invaded the edtech sector last week, collapsing the $100 billion industry by ordering edtech companies to go non-profit. This was days after it ordered ride-hailing company Didi to stop registering new customers and removed it from China’s app store. More Chinese billionaires are expected to witness misfortune if the crackdown continues.