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Market Views

Alibaba in hot water on China’s regulators probe over Ant Group

The eCommerce juggernaut seems to be in hot water over its affiliate company, better known as Ant Group,

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Alibaba office

The world’s second-largest economy, China, has recently launched an antitrust investigation into Asia’s leading e-commerce company, Alibaba, listed on the biggest stock market in the world.

In a report credited to Reuters, the e-Commerce juggernaut seems to be in hot water over its affiliate company, better known as Ant Group, as Chinese antitrust regulators plan to review if it was in anyway monopolistic.

READ: Paypal drops out of partnership with Facebook’s Libra 

Such a move by the Chinese regulators is seen by some market commentators as a huge hit to Jack Ma’s e-commerce and fintech empire.

Nairametrics, some weeks ago revealed how Ant Group’s world record-setting IPO, scheduled to hold in Hong Kong and Shanghai got suspended.

READ: OmiseGO, fastest growing altcoin, up 49% in past 24 hours

  • At the time Ant’s group IPO got suspended, Alibaba, which has a majority stake of about 33% in Ant Group, saw its shares fall. It lost more than 5% in U.S. premarket trading.
  • Ant Group’s Controller, Jack Ma; Executive Chairman, Eric Jing; and CEO, Simon Hu, were scrutinized by regulators in China, according to a statement seen from the China Securities Regulatory Commission.

The probe is part of a sudden and quick crackdown on monopolistic behaviour suspected to be in China’s booming internet ecosystem, and the latest setback for Jack Ma, the 56-year-old former school teacher, who founded Alibaba and became China’s richest man in the modern era.

READ: Square buys $50 million worth of Bitcoins

What they are saying

In a strongly worded editorial, the ruling Communist Party’s People’s Daily revealed if “monopoly is tolerated, and companies are allowed to expand in a disorderly and barbarian manner, the industry won’t develop in a healthy, and sustainable way.”

Also, Chinese Financial regulators plan to meet with Alibaba’s Ant Group fintech affiliate in the coming days, according to a separate statement by the People’s Bank of China, released today.

READ: Citigroup reacts to Citron’s fraud allegations against Jumia, as shares price drops 50%

The meeting would “guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers,” the statement said.

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Ant said it had received a notice from regulators and would “comply with all regulatory requirements.”

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READ: Global companies are buying Bitcoins to hedge against inflation

What you should know

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Ant Group, formerly known as Ant Financial and Alipay, is an affiliate company of the popularly known e-commerce company, Alibaba.

  • Ant Group remains the world’s most valuable Fintech company, and most valuable unicorn company, with a target valuation of over US$280 billion.
  • The group owns China’s largest digital payment platform, Alipay, which serves over one billion users and 80 million merchants, with total payment volume (TPV) transactions reaching RMB118 trillion in June 2020.

READ: Donald Trump bans American investments in companies linked to Chinese military

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Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina. He is a Member of the Chartered Financial Analyst Society.

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Market Views

Nigerian stocks plunge, as WEMA, CHAMPION, MANSARD slump

The market breadth closed negative as LASACO led 17 Gainers as against 23 Losers topped by CHAMPION at the end of today’s session.

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Nigerian banking stocks remain most liquid stocks, as investors gain N25.1 billion, DANGOTE CEMENT, OKOMUOIL and GUINNESS drag Nigerian Stock market down,  SEPLAT, GUINNESS, Breaks Nigerian Bourse Support Levels, Investors Lose N49 Billion  

Nigerian stocks wrapped up the week on a bearish note after the benchmark index registered its third negative close in the last five sessions.

  • Sentiments notably picked up where they left off yesterday, as selloffs persisted in bellwether ticker – ZENITHBANK (-1.55%) as well as in Telco giant – MTN Nigeria (-3.28%).
  • The 74 basis points pullback recorded today kept the All Share Index return firmly rooted in the red and also lowering the Year date returns to -1.88%.
  • Save for the Oil and Gas (+0.25%) index lifted by sustained interest in OANDO (+2.99%), all other sectors closed in the negative territory.
  • The Insurance (-2.32%), Banking (-0.48%), Consumer Goods (-0.40%), and Industrial Goods (-0.19) indices declined following price dips in MANSARD (-5.36%), ZENITHBANK (-1.55%), INTBREW (-3.65%), and WAPCO (-2.94%) respectively.
  • The market breadth closed negative as LASACO led 17 Gainers as against 23 Losers topped by CHAMPION at the end of today’s session

Top gainers

  1. LASACO down 9.82% to close at N1.23
  2. MBENEFIT down 8.11% to close at N0.37
  3. COURTVILLE down 5.00% to close at N0.21
  4. OANDO down 2.99% to close at N3.45
  5. NAHCO down 2.70% to close at N2.28

Top losers

  1. WEMABANK down 10.00% to close at N0.63
  2. CHAMPION down 10.00% to close at N2.52
  3. SUNUASSUR down 9.59% to close at N0.66
  4. AFRIPRUD down 5.74% to close at N5.75
  5. MANSARD down 5.36% to close at N1.06

Outlook

Nigerian stocks ended the last trading session of the week on a bearish note amid profit-taking across the market spectrum.

  • Downtrend was driven by price depreciation medium capitalized stocks amongst which are; WEMA, CHAMPION, MANSARD.
  • That being said, Nairametrics envisages cautious buying on the account that certain market indicators reveal investors are taking some of their gains across the market spectrum.

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Financial Services

Jim Ovia is set to earn N9.58 billion in dividend for FY 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock.

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Jim Ovia: From a clerk to founder of Nigeria's most profitable bank

The founder and Chairman of Zenith Bank Plc, Mr. Jim Ovia is expected to earn a massive sum of N9.575 billion in dividend for the financial year ended December 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock out of the 31,396,493,787 ordinary shares available. This gives him an 11.29% direct interest in the Tier -1 bank.

It’s however important to note that such dividend is subject to a 10% withholding tax in Nigeria.

READ: Is Zenith Bank thriving on the strength of sound financial indices?

Recall that about a day ago, the Board of Directors of the bank in a statement released via the Nigerian Stock Exchange proposed a final dividend of N2.70, amounting to a total payout of N3.00 per share for the financial year 2020 (interim: N0.30).

This proposal reflects the past year’s robust performance and appears to signal that Zenith bank remains well-positioned to perform in the current financial year. However, there was a lower payout ratio at 40.9% compared to FY’19 (42.1%).

  • Key earnings drivers to the financial year performance under review were a 90 basis points drop in the cost of funds to 2.1%, which propelled net interest income (+12.2% YoY) and a 3.8x jump in revaluation gains to N43.4 billion.
  • These offset pressures from operating costs (the cost to income ratio rose 1.2ppts to 50.0%) and impairment charges (cost of risk rose 40basis points to 1.5%)

READ: Jim Ovia: From a clerk to founder of Nigeria’s most profitable bank

Described as the ‘Godfather of banking in Nigeria’ by Forbes Africa, Jim Ovia is quite popular for his business dexterity and leadership skills, especially in the banking sector.

His early interest in technology was the reason Zenith Bank became the first Nigerian company to have a functional website in 1995 and was able to smoothly migrate its operations from analog times to a digital era.

From a single branch in a residential building, Zenith Bank now has hundreds of branches all over Nigeria and several subsidiaries in other countries. The bank became a Public Limited Company in 2001 and was listed on the Nigeria Stock Exchange (NSE), and later on the London Stock Exchange (LSE).

On the 27th of April 2007, Zenith Bank Plc became the first Nigerian bank in 25 years to be licensed by the UK Financial Services Authority (FSA), giving rise to Zenith Bank UK Limited.

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