Alibaba shares hit 6-month high after Jack Ma cedes control of Ant Group, amid a broad rally in Asian shares
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- Alibaba shares rose 9% after news emerged founder Jack Ma was ceding control of affiliate fintech firm Ant Group.
- The gains also come on the back of a broader market rally in Asian shares, thanks to China's reopening.
- A top Chinese central banker suggested over the weekend Beijing's tech crackdown is coming to a close.
Shares of Alibaba surged to a six-month high on Monday, joining a broad-based rally in Asia after China reopened its international borders, signaling the country's back in business.
Shares of tech giant Alibaba led the gains — leaping 9% to a six-month high, before closing 8.7% higher, after news emerged over the weekend that founder Jack Ma was ceding control of Alibaba affiliate Ant Group, following China's crackdown on tech companies since 2020. The stock had fallen 27% in 2022.
Ma, an outspoken teacher turned tech titan, was once a high-profile jet-setter, and the face of China's Big Tech. But he has been lying low since October 2020, after giving a speech criticizing China's financial regulatory system. His words angered the Chinese authorities, prompting intense regulatory scrutiny of his businesses and a wider crackdown on tech firms in the country.
The Financial Times reported in November Ma had been living in Tokyo for six months, and he was spotted last week in Bangkok, Thailand.
However, on December 29, China's Banking and Insurance Regulatory Commission approved Ant to more than double its registered capital in its consumer finance arm to 18.5 billion Chinese yuan ($2.7 billion). This led to an 18% gain in Alibaba's stock price last week, as "the market believes the governmental investment means that the conflict between Jack Ma and the authorities has come to an end," Ming Lu, the China head at Singapore-based Aequitas Research wrote in a note on Monday.
Furthermore, a top Chinese central banker's suggested over the weekend that Beijing's tech crackdown is coming to a close, fuelling positive sentiment in the country's tech sector.
The Hang Seng Tech Index — an index that tracks the 30 largest tech companies listed in Hong Kong — closed 3.2% higher. Shares of Hong Kong-listed Chinese tech giants Tencent and NetEase closed 3.6% and 2.6% higher respectively.
Overall, Asian shares also rallied on Monday. China's reopening boosted market sentiment after the country reopened international borders on Sunday, allowing incoming travelers to enter without quarantine — a major reversal after three years of strict zero-COVID policies.
Hong Kong's Hang Seng Index closed 1.9% higher, the Shanghai Composite Index gained 0.6%, and the Shenzhen Composite Index rose 0.7%.
Outside China, South Korea's Kospi closed 2.6% higher, while Nikkei futures were up 0.9%. Japanese markets were closed for a public holiday on Monday.
Markets are bouncing back, thanks to China's reopening
There could be further upside ahead, Nomura analysts wrote in a note on Monday.
"China's reopening momentum has been faster-than-market, and our own, expectations – though it has resulted in a temporary surge in new cases and depressed mobility, we think investors should or will 'look through' and focus on an eventual economic and earnings recovery later in 2023," Nomura analysts in a note on Monday morning.
While sentiment is high amid China's economic reopening, some analysts caution the ride may be bumpy as the country battles a massive surge in COVID-19 infections, after reversing pandemic policies abruptly last month.
"While that is a positive step towards a longer-term growth recovery, the near-term risk of virus waves are put into question, which could be catalysts for jitters over the coming weeks," Yeap Jun Rong, a market strategist at IG, an online trading platform, wrote on Monday.
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