Alibaba’s shares listed on the Hong Kong stock exchange experienced a significant 4% increase on Monday morning. This positive movement suggests a positive outlook for the company. The surge in share value comes after Alibaba announced a major restructuring of its businesses in March. Some analysts speculate that this restructuring could indicate a potential loosening of government regulations on the Chinese tech industry.
However, industry insiders caution that while regulators may be open to some changes, they are also emphasizing the need for broader industry-wide regulations to effectively govern the entire sector. Oshadhi Kumarasiri, an equity analyst at LightStream Research, highlights this in a report published on research platform Smartkarma. Kumarasiri suggests that the optimism surrounding the end of regulatory scrutiny may be premature, as the new regulations could be just as stringent as the existing ones.
Despite these concerns, some experts, such as Shawn Yang, the managing director of Blue Lotus Research Institute, maintain a bullish outlook on Alibaba. Yang believes that Alibaba’s stake in Ant Group, which recently faced a significant fine, holds considerable value. He cites Bloomberg’s valuation of Ant Group at $22 billion to $57 billion, compared to Ant Group’s own valuation of $78.53 billion through a share buyback. Yang argues that Ant Group’s true worth is more on par with payment giant PayPal, indicating potential upside for Alibaba’s valuation.
It is worth noting that Ant Group’s decision to conduct a share buyback raises questions about its previous plans for an IPO. According to Kumarasiri, the justification for the buyback, which includes providing liquidity to existing investors and attracting/retaining talented individuals through employee incentives, seems unnecessary if an IPO was imminent.
In summary, Alibaba’s Hong Kong-listed shares experienced a significant increase, signaling positive market sentiment. While there is hope for potential regulatory improvements, experts advise caution as broader industry regulations could be equally stringent. Nevertheless, some analysts maintain a positive outlook for Alibaba, citing the valuable stake in Ant Group and its potential for growth. However, questions arise regarding Ant Group’s buyback and its impact on IPO plans.
