Alibaba Selloff Deepens as Antitrust Probe Rattles Investors
December 24 2020 - 3:38AM
Dow Jones News
By Chong Koh Ping and Stella Yifan Xie
Shares in Alibaba Group Holding Ltd. tumbled Thursday, extending
a recent pullback, as China stepped up pressure on the e-commerce
giant and its billionaire boss Jack Ma.
Alibaba's Hong Kong stock dropped 8.1% to 228.20 Hong Kong
dollars, its lowest point since July, in a shortened pre-Christmas
trading session. The decline means Alibaba has now fallen more than
25% since a late October peak, when it was riding high ahead of a
planned blockbuster listing of its financial-technology affiliate,
Ant Group.
On Thursday, Chinese regulators said they were taking actions
against Alibaba and Ant Group, weeks after China stopped an
expected $34 billion listing by Ant in Hong Kong and Shanghai.
The State Administration for Market Regulation said it was
investigating complaints of potentially monopolistic behavior--like
making merchants sell exclusively on Alibaba platforms--while
China's central bank said it and other regulators had summoned Ant
officials for a meeting.
In recent weeks, Chinese officials and regulators have also
issued draft antitrust guidelines for internet platforms; cautioned
that some companies could become "too big to fail"; and warned them
not to engage in practices such as predatory pricing, abusing
consumer data, or selling fraudulent products.
Bocom International analyst Connie Gu said Alibaba's size in
online retail made it a target.
"Alibaba is the largest in the industry," Ms. Gu said, and
officials "would start reining in the biggest first."
In Hong Kong on Thursday, the city's Hang Seng TECH index
retreated 3.4%, with shares in Meituan, JD.com Inc., and Tencent
Holdings Ltd. all falling more than 2%.
Bruce Pang, head of macro and strategy research at China
Renaissance Securities, said Beijing was wary of large internet
companies profiting at the expense of smaller businesses, or
misusing their vast troves of user data.
Mr. Pang said a tougher economic backdrop also informed official
actions, as did China's push to become more self-reliant
economically--and to improve conditions for brick-and-mortar
companies.
"When growing the pie turns out to be increasingly challenging
now, it's time to consider how to split it in a different way,"
said Mr. Pang.
Alibaba's stock hit record highs in October as Ant prepared for
what was a hotly anticipated initial public offering. But recent
setbacks have dented its shares even as other large tech groups
have continued to surge.
As of Wednesday's close, Alibaba's market value stood at $694
billion, according to FactSet.
The company, which also has American depositary receipts that
trade in New York, is the worst-performing constituent of the
10-stock NYSE Fang+ index this year.
After Thursday's fall, Alibaba's Hong Kong stock is now up 10%
for the year. Gains for other FANG+ constituents range from a 29%
rise for Google owner Alphabet Inc., to a near-eightfold increase
surge at Tesla Inc. in the year through Wednesday.
It has also been beaten by local peers like Meituan, the
operator of a popular multipurpose app in China, and e-commerce
rival JD.com Inc. Meituan's Hong Kong stock and JD.com's ADRs in
New York have more than doubled this year.
Yifan Wang contributed to this article.
Write to Chong Koh Ping at chong.kohping@wsj.com and Stella
Yifan Xie at stella.xie@wsj.com
(END) Dow Jones Newswires
December 24, 2020 03:23 ET (08:23 GMT)
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