Ma Yun, Chairman of Alibaba Group. AFP=Yonhap News
“What do you do if the fish in the farm (Alibaba) are nice and tasty? I can’t trust the owner of the farm (Chinese authorities).”
Shareholders of Alibaba, China’s largest e-commerce company, are facing the end of a year of ordeal. This is because the stock price plummeted as the Chinese authorities recently launched an antitrust investigation against the Alibaba Group, raising the level of pressure every day.
When the Hong Kong stock market plunged more than 8% a day due to the bad news of an antitrust investigation, “the Chinese government” has been criticized among investors.
Chinese authorities reprimanded… the biggest decline in 6 years of listing
In the Hong Kong stock market on the 24th, Alibaba Group shares closed at HK$228.20, down 8.13% from the previous day. Alibaba is listed on the Hong Kong and New York Stock Exchanges at the same time. On the same day, the New York Stock Exchange plunged 13.34% to $222, the largest drop since its listing on the New York Stock Exchange in 2014. This is a level of 26% and 30% decline from the previous highs recorded in October.
The plunge in the stock price that day was due to reports that China’s State Market Supervisory Administration was investigating allegations of Alibaba Group’s violation of the antitrust law. It is alleged that Alibaba has forced the participating companies to choose between a competing platform and an Alibaba platform. The government’s announcement of an interview in the form of reprimand (wetan) by calling Ant Group, a fintech (financial technology) company under Alibaba, also encouraged shareholders to leave.
The concerns of domestic investors, who do not have a small proportion of Alibaba stocks, are growing. If you bought 50 million won at the peak in October, you have forgotten about 15 million won. As of the 24th, the scale of Alibaba shares held by domestic investors in the Hong Kong and New York stock markets amounted to $127 million (approximately 140 billion won) and $260 million (approximately 285 billion won), respectively. Together, the two stock markets are worth about 420 billion won in Korean money.
Are you ruining Alibaba’s fundamentals? “Risker”
Chinese authorities’ pressure on Alibaba, which has been in full swing since last month, is increasing. On the 3rd of last month, the Chinese authorities stopped listing the Ant Group worth about 40 trillion won, and on the 14th, Alibaba imposed a fine of 500,000 yuan (about 85 million won) for failing to report antitrust in the process of taking over the department store.
US investment magazine Barrance said, “In recent years, US IT companies have also been threatened by the US government’s antitrust investigation, but the stock price did not show much reaction.” Evaluated.
In a recent interview with Bloomberg, a researcher at Dong Shi Miao Zhong Guan-chun Internet Finance Research Institute said, “Efforts to tighten the reins of the Ma Yun Empire, which has become China’s new Great Horse Buddha, are accelerating.
In the stock information community, there are many criticisms such as “Stop loss is the answer to companies that the government is shaking this way”, “Alibaba’s fundamentals are ruined by the Chinese Communist Party.” I got it.
On the other hand, there are opinions that the regulatory risk surrounding Alibaba will not be greater than expected. Raymond James, an investment bank in the United States, said, “This day’s plunge in stock prices is an overreaction,” and argued, “As the stock price has already reflected concerns about antitrust investigations, now is the time to buy.” Investment Bank Loop Capital also recently predicted, “Considering that even small IT platform companies are exposed to Chinese regulations, this strengthening of regulations has an advantage for Alibaba.”
Coarse reporter [email protected]
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