Did Alibaba’s Ant just got a leg cut off? (BABA, FXI, EWH )

Did BABA’s Ant just got its leg cut off?

Chinese technology shares fell once again Monday on the latest moves from Beijing to reshape online businesses.

Traders mulled a report that the government intends to break up Ant Group Co.’s Alipay business, a Friday statement calling for better protection of gig economy workers’ rights and latest warning against blocking links to rival services. The Hang Seng Tech Index finished 2.3% lower, with Meituan, Alibaba Group Holding and Tencent Holdings Ltd. the biggest drags on the gauge.

China is seeking to break up Ant Group Co.’s Alipay and create a separate app for its loan business, the Financial Times reported, citing people familiar with the plan. Regulators have already ordered the company to separate the back end of the lending unit from the rest of its financial offerings and bring in outside shareholders, it said.

(Alipay lending is a very profitable part of the business. And the outside investors to be brought in will be back by the government.)

Chinese authorities have asked Internet firms to rectify wrongdoings at several gatherings in recent weeks, though have held back from heavy-handed curbs like the shock ban on profits at tutoring companies in late July.

The country’s top technology regulator warned internet firms on Monday against blocking links to rival services, reaffirming Beijing’s order for online giants from Tencent to ByteDance Ltd. to dismantle walls around their platforms.

Source Bloomberg. The story originally broke on Financial Times.

BABA is down 27.8% ytd. The Hang Seng Tech gauge is down 22% so far this year, though has rebounded about 12% from an August low.

Is there a trade here? Discussion very much welcomed.
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