Alibaba Shares Briefly Plunge After Report About ‘Ma’

Alibaba shares briefly plummeted as much as 9.4 percent in Hong Kong trading on Tuesday following an ambiguous report by state media that authorities had taken action against an individual with the surname Ma, rebounding after it became clear this was not company founder Jack Ma.

The incident underscores the anxiety of investors wary of China’s prolonged crackdown on tech giants such as Alibaba, even as the Chinese government seeks to reassure them that the crackdown is nearing its end.

State broadcaster CCTV initially reported that authorities in the city of Huangzhou, the location of Alibaba’s headquarters, had taken action against an individual with the surname Ma, whose name consisted of two Chinese characters, suspected of using the internet to engage in activities endangering national security.

Tech rally

The broadcaster later amended its one-sentence dispatch to indicate that the individual had a three-character name, indicating it was not Jack Ma.

Nationalist tabloid The Global Times said the suspect in question worked at an IT company and had started an online group whose aim was to “split up the country and subvert the state”.

Following the correction Alibaba’s Hong Kong shares recoved to finish trading about 1.8 percent down.

The Chinese Communist Party’s Politburo on Friday had released an unusual statement ahead of the May Day holiday weekend pledging to boost economic stimulus and softening its tone on the tech industry, helping to drive a rally in tech stocks.

The statement promised that “specific measures to support the regulated and healthy development” of big tech companies would be introduced.

Economic headwinds

The promised measures come amidst China’s worst Covid-19 outbreak since 2020, which has forced the shutdown of major cities such as Shanghai, the country’s financial capital, disrupted the operations of Tesla and Apple supplier Foxconn, and hampered worldwide supply chains.

In June 2021 ride-sharing platform Didi Chuxing proceeded with a New York stock listing over the objections of Chinese regulators, triggering the latest phase of a crackdown that has thrown Chinese tech stocks into disarray.

Alibaba’s stock is down 54 percent since then, erasing $340 billion (£272bn) from its market value.

Regulators initially began targeting the company after a speech Ma gave in Shanghai in October 2020 in which he criticised financial controls for stifling innovation.

The ensuing crackdown led to a record $2.75bn fine on Alibaba in April 2021, amongst other measures.