Alibaba shares jump 8% as China ends its antitrust probe on Jack Ma's tech empire with a record $2.8 billion fine

Thomson Reuters

  • Alibaba’s shares jumped 8% on Monday after China imposed a record $2.8 billion fine on the company.
  • The fine, which marks an end to investor uncertainty, wasn’t as hefty as some expected.
  • CEO Daniel Zhang said Alibaba does not expect any material impact from the antitrust fine.
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Alibaba’s Hong Kong-listed shares rose as much as 8% on Monday after China ended its antitrust probe into the e-commerce group with a record $2.8 billion fine.

Chinese regulators opened an antitrust investigation into Alibaba in December and introduced a series of stricter rules for financial services.

In its ruling, China’s State Administration for Market Regulation (SAMR) found Alibaba “abused its dominant market position” in a way that “eliminated and restricted competition” in the country’s e-commerce market.

“Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development,” the company said in a statement on Saturday. “For this, we are full of gratitude and respect.”

Alibaba’s US-listed shares were last up around 5.7% in premarket trading at $236.44.

CEO Daniel Zhang said in an online conference on Monday the company does not expect any material impact from changes made in the exclusivity arrangement with its merchants after the imposition of the fine.

The company’s Hong Kong-listed stock rose 8% as a key source of uncertainty was eliminated, and the fine wasn’t as severe as some expected. The amount is equal to roughly 4% of Alibaba’s annual sales in China, according to Xinhua News.

UBS analysts said the judgment pending for Alibaba is by far the “largest regulatory overhang” for the broader Chinese tech ecosystem, and the apparent resolution should allow the sector some breathing room.

“While US and Chinese regulatory mechanics are different, the recovery seen in US share prices following previous
US regulatory judgments suggests international investors can quickly move past record settlements when presented with strong fundamental growth,” wrote analysts led by Mark Haefele, chief investment officer at UBS Global Wealth Management.

Separately, Warren Buffett’s right-hand man Charlie Munger recently revealed a stake in Alibaba worth $37 million. Daily Journal, a newspaper publisher of which Munger is chairman, counts the Chinese tech group as one of five stocks in its $197 million portfolio. Munger told Barron’s he considers the company as a good long-term investment.

The antitrust fine will be reflected in Alibaba’s March quarter.

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