Jack Ma-owned mobile payment giant Alipay was removed from a high-tech company list in Shanghai, Bloomberg reported.
What Happened: Alipay.com did not meet the spending requirement for research and development, as per a government notice on Sept. 8, the report, said adding the removal could revoke certain tax benefits.
Also Read: How To Buy Alibaba (Baba) Stock
The platform only accounts for a fraction of the R&D expenditure at parent company Ant Group Co., which dedicated over 18.8 billion yuan ($2.6 billion) last year for research, the report said, citing a statement from the company.
It is noteworthy that Alibaba Group Holding Ltd’s BABA fintech affiliate Ant Group underwent a major restructuring in order to address Chinese government concerns that botched its $37-billion IPO plans in late 2020. In June, it appointed Hong Kong Exchanges and Clearing chairman Laura Cha as an independent director.
Global investors had trimmed Ant’s valuation before its suspended initial public offering. Fidelity Investments slashed its estimate for Ant to $70 billion at the end of May from $78 billion in June 2021.
BlackRock, Inc BLK reduced the value to $151 billion as of March from $174 billion, while T Rowe Price Group, Inc TROW trimmed it to $112 billion as of May, down from $189 billion in 2021.
Impact: According to Francis Chan, a Bloomberg Intelligence analyst, the main impact for the company will be losing some tax benefits. “China is placing more emphasis on chip self-sufficiency when it comes to high-tech development,” Chan said, according to the report.
Price Action: Alibaba shares were trading 0.77% lower in Hong Kong on Thursday.
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