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The two-and-a-half-year probe into Ant Group ended after the Chinese regulators fined the financial technology (fintech) giant $984 million on Friday. The move was welcomed by Alibaba’s (BABA) investors, sending shares of Ant’s affiliate surging by nearly 7% at market open on the Stock Exchange of Hong Kong.

China Also Penalized Tencent for Unclear Reasons

Shares of Alibaba saw an uptick on Friday after Chinese regulators imposed a 7.12 billion yuan ($984 million) fine on its fintech affiliate Ant Group, bringing the nearly 3-year probe to an end. According to a statement by the People’s Bank of China, the financial penalties apply to Ant Group and its affiliates in response to the company’s breach of financial consumer protection laws.

The regulators also imposed fines on Alibaba’s rival Tencent Holdings, in addition to other institutions such as PICC Property & Casualty Co., Postal Savings Bank of China Co., and Ping An Bank Co. Tencent will have to pay a 2.99 billion yuan penalty. However, it remains unclear why the tech conglomerate was also punished.

Vey-Sern Ling, managing director at Union Bancaire Privee, said investors’ reaction comes “because scrutiny looks likely to be over and the fine, though big in absolute terms, is very manageable for such a big company.”

China Halted Ant’s IPO in 2020

Chinese authorities investigated Ant Group after halting the fintech firm’s record initial public offering (IPO) in December 2020. In turn, the regulators ordered Ant to rectify its businesses and adhere to the regulatory requirements.

Additionally, the government imposed new rules on Ant, which has a wide range of operations from consumer lending and wealth management to online payments. The People’s Bank of China instructed Ant to fold all financial units into a holding company and ordered it to open its payments app to rival companies.

Meanwhile, Ant’s parent company Alibaba decided to split into six main businesses earlier this year, including cloud services, meal delivery, logistics, and e-commerce, among others. The company’s e-commerce unit has been in talks to launch an IPO in the US, which would likely attract widespread investor attention.

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