The troubles continue for Alibaba, which saw its stock fall more than 5% at the close of Hong Kong trading on Monday, its lowest level since May. A tumble in which it dragged the Hang Seng Tech stock index. It also echoes the spectacular fall that occurred last Friday on the New York Stock Exchange, by -11.1%.
The Chinese giant is indeed suffering from the tensions that persist between the United States and China around a series of issues, ranging from technology to human rights and Taiwan. This time it was the US financial market watchdog that took aim at Alibaba, putting it on a list of more than 250 companies that could be kicked off Wall Street – where they were listed in 2014 – if they failed to meet strict audit criteria for three consecutive years.
In the sights of Chinese regulators
But it’s not just the United States that is taking a close interest in Alibaba’s practices. The latter is also in the sights of Chinese regulators. So much so that rumors have suggested that its founder Jack Ma is considering ceding control of Ant Group, its digital payments subsidiary, in a bid to appease regulators and revive Alibaba’s IPO. Hence its desire to make Hong Kong its other main listing market to have better access to investors from mainland China. In November 2020, Chinese regulators halted Ant Group’s colossal $34 billion IPO in extremis, before ordering it to return to its primary skills as an online payment service provider.
The Hangzhou-based group in eastern China is one of many tech behemoths caught in a sweeping crackdown on alleged anti-competitive practices since late 2020 in China. This campaign to control big tech companies is driven by fears that they have grown too quickly, and by accusations of improper collection of users’ personal data.
Long considered a model of success for Chinese companies, Alibaba, founded by the whimsical Jack Ma, was the first to suffer the punishment of the authorities. It was accused of demanding exclusivity from merchants wishing to sell their products on its platform, avoiding rival e-commerce sites. The firm was fined 2.3 billion euros last year, or around 4% of its turnover in 2019. ” We sincerely accept this sanction and we will abide by it firmly. », Alibaba reacted, pledging to bring its activities into compliance with the regulations ” and to better assume » his ” social responsibilities ».