In the early trading hours in Hong Kong, the Alibaba stock had a 9.4% pullback, erasing about $26 billion off its value.
Alibaba Group Holding Ltd (NYSE: BABA) suffered a massive loss after a report by a Chinese Media created fear and panic among investors. According to the state broadcaster CCTV, authorities in the city of Hangzhou where the e-commerce company is headquartered have taken action against an individual whose surname is Ma. According to the report, the individual used the internet to engage in activities that endangered the life of nationals, and his name consists of two Chinese characters. This in response triggered a massive sell-off as investors assumed the individual in question was Jack Ma, the co-founder of Alibaba.
In the early trading hours in Hong Kong, the Alibaba stock had a 9.4% pullback, erasing about $26 billion off its value. Later, the broadcaster revised the report to clarify that the suspected individual in question is not Jack Ma, stating that the person rather has three Chinese character names. Soon after the revision, investors’ interest became stronger as the Alibaba stock recouped most of its losses. As of the time of writing this article, the stock was 1.7% down.
Steven Leung, a sales director at brokerage UOB Kay Hian in a statement admitted that the revision played a huge role in calming down the panicking investors. He said:
“Talk that a guy with the surname Ma in Hangzhou helped out an investigation triggered the panic, but as clarification came up… (it helped) calm down the market.”
According to Willer Chen, an analyst at Forsyth Barr Asia Ltd, the quick reversal is a serious cause for concern as it shows how weak sentiments dominate the tech space. “I think the market is just a bit too sensitive on this,” he said.
Research discloses that the suspected individual who has been the center of this report works for an IT company as the director of hardware research and development. In addition to his previous charge, he was accused of “inciting subversion of state power” and was put under a compulsory measure on April 25.
In the last couple of years, the shares of Alibaba and other tech companies have been under immense pressure following regulatory crackdowns in the region for data privacy, anti-monopoly, and other rules violations.
In October 2020, he gave a speech accusing financial authorities of stifling innovation. Since then, his business has come under a couple of crackdowns with investors always on high alert. Two days before its planned debut, the $37 billion listing of Jack Ma’s fintech company, Ant Group, was halted in 2020. An antitrust investigation was also launched into his businesses resulting in a $2.75 billion fine for Alibaba in 2021.
Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
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