Chinese internet giant Tencent readies online stock trading platform after market crash as rival Alibaba makes similar move
Tencent, China’s top internet service portal, will soon launch an online stock trading platform on its popular messaging mobile app WeChat.
The platform’s facial recognition function will allow users to verify their identities and open personal stock exchange accounts using their smartphones.
Neither the exact launch date nor full details of the service have yet been made available, for example whether it will charge brokerage fees, as the company said it is still in a final testing phase.
Users will be able to buy stocks via WeChat’s e-wallet function, which also facilitates money transfers, the purchasing of transport and cinema tickets, investment in online financial products, and other services.
The move comes at an awkward time as the Chinese stock market recently experienced a crash that the government is still trying to fully explain.
The Shanghai benchmark index shed 30 per cent over three weeks in late June and early July, causing many retail investors, who make up about 90 per cent of daily trades, to look for alternative investment vehicles.
The index experienced another record drop of 8.5 per cent on July 27, its biggest fall since 2007, prompting Beijing to step in with a number of measures to try and control such extreme market fluctuations..
Yet as smartphone sales and mobile internet users continue to explode across China, Tencent should command a wide audience for the service, especially given that WeChat serves as the most popular social messaging app on the Chinese mainland.
Users will be able to register on Tencent’s platform directly by uploading one of a number of documents proving their identity and then scanning their face using their smartphone to confirm that the two photos match.
Previously, people had to visit securities firms in person or at least engage in a video chat to confirm their identity.
Despite nagging security fears, facial recogition technology seems to be on the cusp of taking off in the world of finance, with China unveiling what it claimed to be the world's first ATM using this software in May, and Mastercard and China's Alibaba both experimenting with how to allow mobile transactions verified by "selfies".
Given the ongoing e-commerce boom, China made a surprise announcement late last week that could hamper its continued growth.
A draft regulation released by China's central bank on Friday said it would limit online transactions with third-party payment providers to 5,000 yuan (US$800) a day, or even less if the providers have fewer security measures.
A spokeswoman for Tencent told the South China Morning Post that the company will “closely communicate with the central bank to offer constructive suggestions that promote the development of the [online] payment industry, along with other market players”.
As market jitters and fears of data privacy and online security continue to set nerves on edge in China, the new trading platform will launch a range of services including an index fund to cater for more cautious investors, the company said.
As such, investors from China will be able to use the fund to tap into the Hang Seng index, which tracks the biggest companies in Hong Kong and is seen as more stable.
The new trading platform will operate under Tenpay, Tencent’s online payment service that had over 16 million registered users as of July.
Chinese internet giant Alibaba is set to launch a similar stock trading platform through its online payment system Alipay, which has 350 million registered users. It announced the platform early last month but has not yet activated the trading function. At present, it can only be used to track indexes.