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Alibaba鈥檚 shares soar after record China fine
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Alibaba鈥檚 shares surged by as much as 9 percent in Hong Kong yesterday, after the e-commerce giant was fined a record 18.23 billion yuan (US$2.78 billion) at the weekend for abusing dominant market position by China鈥檚 antitrust regulator.
The shares rally on relief that the fine marked the end of a four-month antitrust investigation into the company 鈥 a key source of uncertainty for the market was therefore removed, and that the fine and steps ordered were not more onerous.
China鈥檚 State Administration for Market Regulation announced an administrative penalty decision on Saturday, accusing Alibaba of abusing its market dominance since 2015 by prohibiting merchants from opening stores or participating in promotional activities on other competitive platforms, and imposing a fine of 4 percent on its 2019 domestic sales.
The company will introduce measures to lower entry barriers and business costs faced by merchants on its platforms, CEO Daniel Zhang said in a call with analysts yesterday.
The group does not expect any material impact from changes to its exclusivity arrangements with merchants, Zhang said.
Alibaba executives said despite the record fine and measures ordered by the market regulator, they remain confident in the government鈥檚 overall support of the company.
鈥淭hey are affirming our business model,鈥 said the company鈥檚 executive vice chairman Joe Tsai. 鈥淲e feel comfortable that there鈥檚 nothing wrong with our fundamental business model as a platform company.鈥
Morgan Stanley said in a Sunday note, 鈥淒espite the record fine amount, we think this should lift a major overhang on BABA [Alibaba] and shift the market鈥檚 focus back to fundamentals.鈥
鈥淣ow the penalty is determined, the market鈥檚 uncertainty about Alibaba will be reduced,鈥 Everbright Sun Hung Kai analyst Kenny Ng wrote in a note.
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