Jack Ma resurfaced on the media recently. One was about his sightings in Bangkok and another is about him losing control of Ant Group.
Either way, it is clear that Jack Ma is no longer playing an active role in China’s business scene.
This is good for Alibaba and Ant Group in case you are wondering. We received a couple of messages over the weekend regarding this.
So let’s explain why this is good.
Ant Group used to be a darling stock and was on route to be the biggest IPO in history. Investors were clarmoring for some allocation.
Then Jack Ma criticized the Chinese financial regulators during a summit and that was the start of all the China tech regulations.
Most people think that it was the pettiness of the Chinese government who wanted Jack Ma out before he gets louder.
I think there’s some truth to that.
But the issue was deeper…
There were Xi’s political enemies who held stakes in Ant Group and could potentially benefitted in billions of dollars from the IPO.
Boyu Capital was one of the investors. It was partly founded by Jiang Zhicheng, the grandson of former Chinese leader Jiang Zemin.
Another stakeholder is a group led by Jia Qinglin, a former member of the Politburo Standing Committee with strong ties to Jiang Zemin.
And there could be some corrupted dealings that got Ant Group the advantages it needed in the earlier days.
Hence, Jack Ma, Ant Group and Alibaba, were indirect victims of a political purge.
The rise of Jack Ma was probably helped by the Shanghai faction (Jiang Zemin’s gang) and hence, he is seen as an ally.
In order for Ant Group to list and Alibaba to be ‘cleaned up’, Jack Ma has to delink from these enterprises.
Jack has already retired from Alibaba since four years ago. But his effect lingered on as he has more than 50% control of Ant Group and Alibaba has a substantial stake in Ant too.
So with Jack Ma losing control of Ant is good for Alibaba – it is now free of this political burden.
We believe that Ant Group IPO is on track and Alibaba recovery is finally underway too.
Alibaba rallied 8% at the time of writing.
