China cracks down on its technology giants

Alibaba, Tencent and their peers grew fast by exploiting gaps in a heavily regulated economy. But with the Chinese government tightening the rules, their prospects are more uncertain. Cris Sholto Heaton looks at the sector and asks if it's worth buying in.

Jack Ma getting a spanking

It is difficult to understand what Jack Ma was hoping to achieve when he spoke at a high-level financial summit in Shanghai on 24 October. The Alibaba founder was just about to preside over the initial public offering (IPO) of Ant, the giant payments, investing, lending and insurance platform that has become the world’s most valuable financial-technology firm. Yet Ma – who has long had a fraught relationship with China’s financial establishment – decided that this was a good time to launch an open attack, suggesting that old-fashioned regulators are stifling innovation and bluntly accusing banks of a “pawnshop mentality” that can’t meet the credit needs of today’s economy. Neither is capable of delivering the financial system that modern China needs – unlike Ant, he implied.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.