“Alibaba” shares jump 9% after the “monopoly storm” passes
Tuesday – 2 Ramadan 1442 AH – April 13, 2021 AD Issue No. [
Alibaba shares jumped about 9% in Hong Kong after the group downplayed the repercussions of the exorbitant fine imposed on it (Reuters)
Beijing: “Asharq Al-Awsat”
Since last December, the Alibaba Group, a symbol of China’s digital economy’s success, has been under investigation for “suspected monopolistic practices.” Last Saturday, the governing body said that the group, founded by billionaire Jack Ma, committed violations, and convicted the company of a heavy fine … Alibaba was accused of imposing exclusivity on merchants wishing to sell their products on its platform and avoiding dealing with competing e-commerce sites.
“We sincerely accept this punishment and will strictly comply with it,” the group’s executive vice president, Ju Tsai, said on a conference call. He added, “We have benefited from wise advice (from the regulatory authority) on some specific issues related to the antitrust law … We are pleased to be able to turn the page.”
The fine represents 4 percent of the group’s turnover in 2019, which amounted to 455.7 billion yuan (58.45 billion euros), according to the official New China News Agency.
For his part, Chairman of the Group’s Board of Directors, Daniel Chang, told investors that the fine “will not have negative repercussions” on the company’s business. The group promised to cut operating costs for merchants who use its platforms.
These comments seemed to reassure investors. Alibaba’s share price rose by nearly 9 percent Monday morning on the Hong Kong Stock Exchange, where it is considered one of the most valuable companies, as well as on the New York Stock Exchange.
“Despite the record fine amount, we believe this would take a heavy burden off the Alibaba Group and bring the market back to fundamentals,” Morgan Stanley wrote in a note on Sunday, one day after the fine was issued.
While it was stated in a note issued by the American credit rating agency Moody’s that the measures that Alibaba will have to take to comply with the rules of the regulatory authority will “likely limit the growth” of its revenues and relax its weight on its profits.
For months, authorities have targeted billionaire Jack Ma, who formally retired from the group in 2019. However, he remains a major contributor to it.
And in November 2020. Chinese regulators at the last minute halted a massive $ 34 billion IPO of Ante Group, a branch of the online payment group Alibaba. The Wall Street Journal reported last month that Alibaba Group had also come under pressure to dump a wide range of media assets, including a possible sale of the South China Morning Post in Hong Kong.