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China Stock Turmoil 2015

Alibaba shares fall 3.5pc to below IPO following China market slump

PUBLISHED : Tuesday, 25 August, 2015, 10:54am
UPDATED : Tuesday, 25 August, 2015, 1:50pm

Amid the biggest one day drop in the Shanghai composite index since 2007, US-traded shares in Alibaba fell 3.5 per cent on Monday to US$65.80- dropping below its IPO price of US$68.

Alibaba went public in September 2014 to the largest IPO in history, raising US$25 billion- with share prices rising to a high of US$119.15 in November last year.

However, prices fell as low as US$59 a share on Monday, amid concerns over China's economy, before recovering to US$65.86.

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The Shanghai composite index dropped 8.5 per cent on Monday amid recent months of volatility and concerns voiced by investors over a weakening Chinese economy and flagging demand.

What started as a sell off in mainland Chinese and Hong Kong indices, where US$692 billion evaporated, quickly spread to stock markets around the world.

The S&P 500 and Nasdaq fell 3.9 per cent and 3.8 per cent respectively, while in London, around £74 billion of the value of the FTSE 100 index vaporised.

The US stock market saw a massive sell-off as stocks dived the most since 2011. Most US-listed Chinese firms were also victim to sell-offs, with some of China’s biggest firms suffering falls.

Shares for search firm Baidu fell 5.57 percent to US$144.39; NetEase, another internet company, fell 4.21 per cent to US$54.95; cybersecurity firm Qihoo 360 Technology fell 7.4 per cent to US$51.79 while travel company Ctrip.com slid 3.55 per cent to US$61.03.

Alibaba chairman Jack Ma Yun announced a US$4 billion buyback of shares in August following lacklustre returns and a wavering stock price.

The tradable value of China's stock market equates to around 40 per cent of GDP, a potentially mitigating factor compared to developed economies where stock market value can be over 100 per cent of GDP.

Watch: Shanghai shares plunge but other Asia Pacifc markets recover