Alibaba shares soar as it plays down hit from record fine
Shares in tech giant Alibaba climbed more than six percent yesterday as the ecommerce titan reassured investors that a record $2.78 billion antitrust fine imposed by China would have little impact on its operations. However, concerns that officials had not finished with a crackdown on the sector weighed on big-name firms including Tencent and JD.com.
Regulators slammed the tech giant with the penalty on Saturday after a months-long probe concluded it had been abusing its dominant market position. But in a conference call to investors yesterday, Alibaba’s board put a positive spin on the regulatory blow saying it appeared to be the end of the investigation, with chairman Daniel Zhang saying the fine would not have a “negative impact” on business operations.
The sanction comes as the government cracks down on major Chinese tech platforms - and Alibaba in particular - over allegations of anticompetitive behavior and misuse of consumer data. “We had good guidance on some of the specific issues under the anti-monopoly law and I would say that we are pleased that we are able to put this matter behind us,” company vicechair Joe Tsai added.
Alibaba will introduce measures to lower entry barriers and business costs faced by merchants on its shopping platform. The firm’s stock price jumped nearly nine percent to as high as HK$237.60 in Hong Kong yesterday morning before easing back marginally to close up 6.5 percent. But other tech firms took a hit with Tencent down one percent, JD.com losing two percent and NetEase one percent lower.
“Alibaba’s stock has rallied as the fine wasn’t as bad as it could have been,” said OANDA’s Jeffrey Halley. “However, it is the thought that counts, and investors seem concerned that Alibaba will not be the last China tech giant in the fine firing line.”
Alibaba has faced special scrutiny after cofounder Jack Ma publicly criticized Chinese regulators in October as being stuck in the past after they expressed growing concern over the push into online lending, wealth management and insurance products by Alibaba’s online-payments arm, Ant Group. “We have continuous communication with the regulators,” Zhang said, adding that the group will “fully comply” with the requirements.
The probe, which began in December, centered on Alibaba’s practice of forbidding merchants who wish to sell their wares on its popular online marketplaces from simultaneously offering them on rival e-commerce sites, the State Administration for Market Regulation said on imposing the fine Saturday. —AFP