Alibaba, JD Logistics shares slide as Japan’s SoftBank reportedly plans major sell-off of US$36 billion China portfolio
- The divestment may take the heat out of a recent run-up in Chinese tech stocks as they recover from Beijing’s regulatory crackdown
- SoftBank may reduce its stake in Alibaba to less than 4 per cent from about 14 per cent, the Financial Times reported
SoftBank, which was founded by billionaire investor Masayoshi Son, holds US$36.8 billion worth of stakes in 11 Chinese companies trading in Hong Kong and the US, according to Bloomberg data. By far the biggest is its stake in e-commerce giant Alibaba valued at US$35.2 billion, while it also holds US$1.32 billion of Full Truck Alliance shares and US$196 million of JD Logistics stock, the data shows.
Alibaba owns this newspaper. SoftBank has not responded to a request for comment.
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The Hang Seng Tech Index surged almost 10 per cent last month, while the Nasdaq Golden Dragon China Index rose 3.6 per cent in the same period.
However, the fallout from SoftBank’s sell-off may be merely a blip, according to Wu Kan, an investment manager at Soochow Securities in Shanghai.
“It’s most probably the action by some individual shareholder and doesn’t have much to do with corporate or industry fundamentals,” he said. “Given the fundamental improvement and sentiment on tech companies, the stocks will hold up well to withstand the sell-off headline.”
Alibaba is not alone in facing the prospect of sell-offs by major investors. Tencent’s biggest shareholder Prosus said it would transfer 96 million shares in the WeChat operator to the Hong Kong stock exchange’s clearing and settlement system, implying a new bout of selling was in the offing. The internet giant’s shares tumbled more than 5 per cent on Wednesday.
Alibaba’s shares fell 2 per cent to HK$94.15 on Thursday in Hong Kong, after its American depositary receipts (ADRs) tumbled almost 6 per cent to US93.84 overnight.
At one point its Hong Kong-listed shares were down more than 5 per cent.
JD Logistics, in which SoftBank has a 1.8 per cent stake, slipped 0.8 per cent to HK$12.94, while ZhongAn Online P&C Insurance rose 0.4 per cent to HK$25.80, reversing a loss of as much as 3.5 per cent, and e-commerce platform Baozun was unchanged at HK$13.38. SoftBank has a 1.9 per cent interest in ZhongAn and 12 per cent in Baozun, valuing the investments at US$86 million and US$35 million respectively, according to Bloomberg data.
SoftBank may reduce its stake in Alibaba to less than 4 per cent from about 14 per cent, the Financial Times reported, citing an analysis of regulatory filings.
Alibaba warned of a possible divestment by SoftBank in its annual report in February, saying that the Japanese firm would continue to monetise and sell its stock or depositary receipts through forward contracts and margin loans in the future.
Shares of Alibaba had gained a combined US$80 billion in market capitalisation in Hong Kong and the US since the Hangzhou-based company unveiled a plan late last month to split its US$220 billion business into six units for future spin-off listings. Citic Securities said the move could boost Alibaba’s valuation by a fifth.
SoftBank owned a third of Alibaba from a US$20 million investment more than 20 years ago that has turned into its most successful bet. It has already sold more than US$7 billion in Alibaba shares this year, the Financial Times report said.
SoftBank lost 1 per cent to 5,128 yen (US$38.5) in Tokyo, extending its decline to 9.1 per cent this year.
