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A pedestrian looks at the electronic screen displaying Hang Seng Index stocks outside a bank in Mong Kok, Hong Kong. Photo: Winson Wong
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Hong Kong stocks slide with Alibaba’s 10% sell-off as US tech war kills asset spinoff plan, Jack Ma to cut stake

  • Steep losses in Alibaba Group and top Chinese tech leaders narrowed the market’s gain this week to 1.5 per cent
  • Cancelling AliCloud spinoff could erode the prospect of receiving in the group’s reorganisation dividends, analysts said
Hong Kong stock market
Jiaxing Li
Jiaxing Li
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Hong Kong stocks slumped, dragged down by Alibaba Group’s worst sell-off in more than a year, after China’s biggest technology company scrapped a plan to spin off its cloud-computing business amid heightened tech war and cybersecurity concerns.

The Hang Seng Index sank 2.1 per cent to 17,454.19 on Friday, trimming the gain in the week to 1.5 per cent. The Tech Index lost 1.7 per cent, while the Shanghai Composite Index added 0.1 per cent.

Alibaba plunged 10 per cent to HK$73.25 , the most since an 11.4 per cent drop in October last year. The sell-off erased more than US$21 billion from its market value, in addition to US$20 billion overnight when its American depositary shares crashed 9.1 per cent in New York trading.

The stock also came under pressure after founder Jack Ma’s family trusts, JC Properties and JSP Investment, each disclosed a plan to sell about US$435 million worth of shares on November 21, according to their US exchange filings.

“This shift will raise concerns about the restructuring plan that just started this year,” said Willer Chen, senior analyst at Forsyth Barr Asia in Hong Kong. “The sum-of-the-part valuation argument looks likely to be undermined by the cancellation of the [potential] cloud IPO.”

Other tech leaders also retreated. Alibaba Health Information slumped 6.3 per ent to HK$4.59, Baidu slid 4.8 per cent to HK$103.50 and Tencent tumbled 3 per cent to HK$315.20. JD.com fell 2.4 per cent to HK$105.40, after the group replace the CEO of its retail unit days after the Singles’ Day online shopping festival.

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Biden to introduce new restrictions on US investments in China, declares tech ‘emergency’

Biden to introduce new restrictions on US investments in China, declares tech ‘emergency’
Alibaba, which operates the Taobao and Tmall platform and owns the South China Morning Post, announced that it would terminate the proposed spinoff of AliCloud due to uncertainties caused by tougher US chip export curbs, limiting its ability to deliver higher returns to investors. Alibaba also put off a plan to list online grocer Freshippo, according to statements in its quarterly results.
The Biden administration last month tightened regulations aimed at hobbling China’s artificial intelligence development by cutting off the country’s access to less-advanced chip-making equipment from ASML and data-centre chips from Nvidia.

Mainland Chinese investors took HK$2.1 billion (US$268 million) off the table this week through Thursday. Global funds also sold onshore-listed stocks, amounting to 5 billion yuan (US$690 million) in net outflows, according to Stock Connect data.

Two stocks debuted on Friday. WuXi XDC Cayman jumped 36 per cent to HK$28 in Hong Kong, while Grand Kangxi Communication Technology surged 151 per cent to 26.39 yuan in Shanghai.

Asian stocks were mixed. Japan’s Nikkei 225 gained 0.5 per cent, while Australia’s S&P/ASX 200 declined 0.1 per cent and South Korea’s Kospi lost 0.7 per cent.

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