BABA: Alibaba Shares Move Upwards After Announcement of Breakup Plan
- Chinese e-commerce giant Alibaba has announced it will split into six separate company units.
- The move signaled the easing of government regulation of the space and caused a 14% jump in BABA.
- It also caused other Chinese stocks to move upwards including SoftBank, which owns 13.7% of Alibaba.
E-commerce company Alibaba sent optimism through the Chinese tech sector this week, which has been in a bit of a slump recently amid concerns surrounding the government’s heavy handed approach to its growth. A new restructuring plan announced by the Jack Ma-founded company has investors thinking that the Chinese government might ease up on some of its regulation and allow stocks some room to grow.
What happened?
Alibaba announced yesterday that the company plans to split into 6 separate units and seek funding and listings for the majority of them. The move had a significant impact on its share price, causing a 14% jump on Tuesday in its US listed shares, as this had been the first major sign of China easing its regulatory scrutiny of the company. The main unit of Alibaba will restructure to become the holding company of its other units, and Daniel Zhang will also remain as the company’s CEO – a position he has held for almost 8 years.
Positive signs
It wasn’t just Alibaba’s share price enjoying the optimistic outlook, other Chinese stocks were heading upwards on the news. In particular SoftBank, which owns a 13.7% share of Alibaba, also jumped by 6% today. Although its shares are still down by 25% from its 2022 high in November. Other Chinese stocks were also moving upwards, including internet technology company Tencent which saw a 4.24% jump. Despite the optimism, Alibaba will still be under Beijing’s watchful eye – as the company has been accused by regulators in the past of monopolizing the e-commerce industry.