(Bloomberg) — Turns out that even the most compliant Chinese billionaires are not immune to the regulatory onslaught plaguing the world’s second-largest economy.
Tencent Holdings Ltd.’s mild-mannered boss, Pony Ma, has turned conventional wisdom about China’s business elite’s political pecking order, losing more paper wealth in the past nine months than Jack Ma, the combative co-founder of Alibaba Group. Holding Ltd. and Ant Group Co.
The turnaround underscores how quickly Beijing’s crackdown has expanded since authorities scuttled Ant’s first public offering on Nov. 3. What initially seemed like a targeted campaign against China’s most outspoken tech mogul has since spread to nearly every corner of the industry and beyond. -emphasize unbridled growth in favor of other priorities, such as data security, financial stability and reduction of inequality.
For most of China’s nine-month campaign to rule in big tech, Tencent seemed to outperform its nemesis, helped in part by Pony’s reputation for staying out of the limelight. While Alibaba had to cough up a record $2.8 billion in antitrust fines, regulators imposed only token fines on Tencent for failing to seek approval during previous acquisitions and investments. The music arm was recently ordered to give up its exclusive streaming rights, although it escaped the doomsday scenario of a breakup of the company.
But a damning state news report Tuesday turned the tables. Tencent shares recorded their biggest intraday drop in a decade after a Xinhua-affiliated newspaper targeted the company’s main gaming businesses, fueling speculation that it could become the next target of Beijing’s crackdown. The defeat left the company, whose market cap briefly approached $1 trillion earlier this year, valued at $550.5 billion.
According to the Bloomberg Billionaires Index, Pony’s net worth has fallen nearly $14 billion since Ant’s IPO was suspended in November, to $45.8 billion on Tuesday. He now ranks third on the Chinese rich list behind Jack, who has a net worth of $47.8 billion.
While state media toned down their gaming language on Wednesday, contributing to a more than 5% recovery in Tencent, the stock is still 17% lower for the year. The outlook will depend in large part on what comes next from regulators, who shocked investors late last month with a crackdown on corporate governance that will force many of them to become nonprofits.
Tencent is already moving to appease Beijing, promising to further limit playtime for minors and ban in-game purchases for the youngest players. The company also suggested the possibility of the industry banning games for under 12s altogether.
(Updates detailing regulatory action in fourth paragraph)
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