Blog: Alibaba may retreat amid fresh regulatory curbs – Hong Kong Standard

Agencies and staff reporter

Alibaba’s (9988) shares may retreat in the near future after a recent surge as regulatory risks for Chinese tech firms still linger with the government showing no signs of relaxing its oversight of the tech industry.

Financial news outlet Caixin reported that Alibaba and its financial affiliate Ant Group have set up three corporate Chinese Communist Party committees, which include more than 150 party branches altogether.

And Chinese government entities have acquired minority stakes with special rights in two domestic units of Alibaba, business registration records showed.

Meanwhile, discussions were also under way for the government to take golden shares in gaming giant Tencent (0700), according to a report in the Financial Times.

And earlier this month, Alibaba signed a cooperation agreement with the government of Hangzhou, where the company is headquartered.

All these moves might lead to a short-term adjustment of Alibaba’s recent gains, analysts said.

However, some analysts said China’s acquisition of so-called “golden shares” in Alibaba’s units can be helpful to its prices since it also reduces regulatory uncertainties.

These golden shares – usually a stake of about one percent of a firm – are bought by government-backed funds or companies which gain board representation or veto rights for key business decisions.

“I believe the news is positive to Alibaba’s share prices as it provides a clearer picture of what regulation will be like. But it also indicates a greater state influence and may have mixed impacts on business operations,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International.

Investors have started to focus more on the fundamentals of tech firms following China’s zero-Covid exit and vow to end a crackdown on the sector, Ng said.

Meanwhile, Alibaba called an FT report that the e-commerce giant has been paying scholars to lobby the authorities to relax regulations a “misleading premise.”

In other news, authorities are set to allow Didi Global’s apps – including its ride-hailing app – back on the domestic market as soon as this week before the Lunar New Year, according to sources.

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