‘Distorted’ private tech market valuations to see correction in next six to nine months, says Alibaba’s Joe Tsai
- The Alibaba executive vice-chairman says there is no end in sight for the US-China trade war
- Tsai expects tax cuts for small businesses and individuals to help stimulate China’s economy
Valuations in China’s private technology market are distorted and are likely to see a “healthy correction” within the next six to nine months, according to Alibaba Group Holding executive vice-chairman Joseph Tsai.
“Entrepreneurs [in China] had it too easy raising gigantic billion-dollar rounds of capital and multibillions in valuation,” said Tsai, in a dialogue session at a Thomson Reuters Breakingviews Predictions 2019 event on Friday. “[A correction] will happen and it’s healthy.”
Tsai’s remarks have come as technology stock prices around the world took a hammering in a sell-off that started in October last year amid economic uncertainty and an escalating US-China trade war.
Chinese companies that went public last year, such as smartphone maker Xiaomi Corp and on-demand local services giant Meituan Dianping, are currently trading well below each firm’s offer price.
Similar to the declines seen by Chinese internet peers Tencent Holdings and Baidu, e-commerce giant Alibaba Group Holding saw its share price fall about 25 per cent from a peak of about US$210 in mid-June. The New York-listed company, which owns the South China Morning Post, currently trades at about US$156.