The founder and chairman of Alibaba, China’s largest e-commerce company, have reportedly increased their stakes. This news and reports of other Chinese companies buying back their stocks have brought some good news to the recently plummeting Chinese stock market.
On the 24th, China’s state-run Securities Times reported that Jack Ma, the founder of Alibaba, and Daniel Zhang, the chairman of Alibaba, have significantly increased their stakes in Alibaba recently.
The scale of Jack Ma’s purchase remains undisclosed in China, but according to a report by the New York Times (NYT) citing sources, Ma purchased Alibaba stocks worth $50 million on the Hong Kong stock market in the last quarter of last year.
Daniel Zhang, appointed as the chairman of Alibaba from the vice chairman in September last year, also bought Alibaba stocks worth $151 million listed on the New York Stock Exchange in the previous quarter of 2023, according to U.S. Securities and Exchange Commission data.
On the 23rd (local time), Alibaba’s stock price closed at $74.02, marking an almost 8% increase on the New York Stock Exchange and a more than 6% surge in the Hong Kong stock market.
Given Alibaba’s status as the largest market cap among Chinese concept stocks (Chinese stocks listed on foreign stock markets), its influence was significant. Other Chinese stocks listed on the U.S. stock market, such as Bilibili, NetEase, JD.com, Weilai Automobile, Baidu, Xiaopeng, and Pinduoduo, also showed strong performance.
Local Chinese analysts explained, “The founder’s increased stake shows confidence in the future growth of the company, the management team, and their strategy.”
Alibaba has faced challenges, being pushed back in the competition by latecomer Pinduoduo and having to withdraw its plan to spin off its cloud service division due to the U.S.’s control over semiconductor exports to China, leading to a decline in its stock price. Although Jack Ma announced in November last year that he would sell 10 million shares of Alibaba worth approximately 1.155 trillion won ($970 million), he temporarily halted the plan, citing that Alibaba’s stock was undervalued.
Meanwhile, as all three major Chinese stock indices fell to their lowest levels in 4~5 years and the Hang Seng Index in Hong Kong also recorded its lowest level in 19 years, the authorities are reportedly planning to support the stock market. Bloomberg News reported the day before that the authorities are considering raising 2 trillion yuan through overseas accounts of Chinese state-owned enterprises and injecting it into the stock market, along with the plans to buy stocks by establishing a fund of 3000 yuan.
In line with these efforts, Chinese companies are also announcing plans to buy back their stocks to support. According to Chinese economic media CaiLian Press, as of the night before, 14 companies, including Weil Semiconductor, Tsinghua Tongfang, and Changfang Science and Technology, announced plans to buy back their stocks.
The Chinese stock market rose immediately and showed a mixed trend after the opening due to consecutive news of stock price support.
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