By Dhirendra Tripathi
Investing.com – The ADRs of some of China's biggest companies were hit on Friday by a fine in their home country, pushing them down by as much as 3% in premarket trading.
Overnight, the Chinese markets regulator penalized 12 companies for violating anti-monopoly rules, in what was interpreted by some as a shot across the bows of companies whose financial clout is reportedly seen as a threat by some in Beijing.
Those getting the stick include Alibaba Group (NYSE:BABA), Baidu (NASDAQ:BIDU), Tencent (OTC:TCEHY), ride-hailing company Didi Chuxing and a ByteDance-backed firm. Alibaba Group ADRs were down 2.4%, Baidu 2.7% and Tencent Music down 3.0%. Tencent Holdings' stock in Hong Kong had finished down 4.4% but was yet to trade in premarket.
Quoting the State Administration for Market Regulation (SAMR), Reuters said the companies were fined 500,000 yuan ($77,000) each for behavior that caused market concentration but did not exclude all competition from other companies.
The fines were small, relative to the size of the companies involved. As such, markets were spooked more by the signal that Beijing was sending. The move comes only a couple of months after regulators wrecked plans for Jack Ma's Ant Group to go public with fresh regulations that cracked down on some of its most lucrative financial services.
Tencent said in a statement it would actively rectify operations and provide the regulator with timely reports on deals in future.
China has stepped up scrutiny of its internet giants in recent months, citing concerns over monopolistic behaviour and potential infringement of consumer rights.
The regulator has fined Alibaba (NYSE:BABA), Tencent-backed China Literature and other firms for not reporting deals properly for anti-trust reviews.