Alibaba’s market value plunges $20 billion
Investors wiped out some $20 billion off Alibaba Group’s market value on Friday after it scrapped plans to spin off its cloud business, citing uncertainties over US curbs on exports to China of chips used in artificial intelligence applications.
Alibaba Group’s Hong Kong shares closed down 10%, their biggest single-day drop in more than a year.
It was the first market reaction in Asia since the stunning strategy reversal was announced late on Thursday, after which the company’s US-listed securities closed down 9%.
“The shelving is a surprise and makes us wonder if there are issues behind the scenes that we aren’t aware of,” said Jon Withaar, the Singapore-based head of Asia special situations at Pictet Asset Management.
Read: Alibaba shares slide 4% after former CEO quits cloud unit
Alibaba’s concerns over the US export curbs announced by Washington in October come on the heels of similar worries raised this week by Chinese social media and gaming company Tencent Holdings which said the restrictions would force it to seek domestically produced alternatives.
Alibaba, once Asia’s most valuable stock, was worth around $830 billion at its peak in October 2020 but is now valued at less than a quarter of that amount, as the e-commerce company took centre stage in Beijing’s technology sector crackdown and as the Chinese economy slowed.
Asked if there were any other reasons behind shelving the IPO, Alibaba referred Reuters to remarks Chairman Joseph Tsai made during an earnings call on Thursday on how the company planned to invest in its cloud business.
Published in The Express Tribune, November 18th, 2023.
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