‘Alibaba’ shares plummet over the year Bad signs for the Chinese tech-economic group

The bilateral summit between US President Joe Biden and Chinese President Xi Jinping that ended has been echoed by many media and analysts. Despite improving the atmosphere between the two countries, little progress has been made in efforts to repair relations between the two countries.

One sign that echoed the day after was Company stock price “Alibaba Group” The Chinese e-commerce giant plummeted 10% in Hong Kong trading on Friday, Nov. 17, after closing down 9% the previous night in the United States.It is an adjustment down in one day. “The hardest hit in 2023” and wiped out about $20 billion in market value.

The important factor that caused the stock to fall so big was not because of the results of the 2nd quarter of July-September, where the company’s revenue grew only 9% to 30,810 million dollars (approximately 1.08 trillion baht), but because of Abandoned spin-off plans “Cloud Business” which is the future of the company But this future is darkened by the effects of worsening US-China relations.

Alibaba originally wanted to spin off its cloud business group, Cloud Intelligence Group, or “Ali Cloud,” to become independent and list it on the stock exchange. In order to compete fully in the cloud market with large players in the US such as Amazon Web Services (AWS) and Microsoft Azure (Azure).

Alibaba statement said: US measures ban the export of microchips to Chinese companies. This causes uncertainty in the direction of the cloud. Intelligence Group and may cause the shareholder’s intention to increase the value of this business not to be as expected. Therefore, the company had to put its spin-off plans on hold. and instead focus on developing sustainable growth models under these difficult to predict circumstances.

Meanwhile, before reporting second quarter results, Alibaba also reported to the stock exchange that Family Trust “Jack Ma” Alibaba’s founder plans to sell 10 million shares worth about $870.7 million.

“Although no longer involved in administrative work But we believe that Ma’s sale of Alibaba shares during this period of low prices It could affect market sentiment,” Kenneth Fong, an analyst at UBS, told Reuters.

As of 17 Nov. 2023 Alibaba shares in Hong Kong have fallen 15% this year, outpacing the Hang Seng index’s average decline of 11.2%.

Alibaba was once the most valuable stock in Asia. At its peak, the company had a market capitalization of around $830 billion in October 2020, before a major reorganization of China’s technology sector followed. It is centered around Alibaba, which has faced accusations of monopolization and others. As a result, Alibaba’s current market value has dropped to only one-fourth from the peak period.

Signs reflecting the Chinese economy

CNBC reports that In the past, Alibaba’s performance has often been viewed as an index that reflects the state of the Chinese economy in terms of consumption. Because it is the largest e-commerce platform in the country

Economists expect China’s economy to bounce back after the COVID-19 outbreak. last year But the recovery was not fast enough as expected due to the drag on the real estate market which was facing a major crisis. and various structural problems in China, dragging down the country’s overall recovery as well.

In its July-September quarterly results, Alibaba’s revenue grew 9% to 224.4 billion yuan, in line with analysts’ expectations. But it had a net profit of 27.7 billion yuan (about 133 billion baht), which was less than analysts’ expectations of 29.7 billion yuan.

Joseph Tsai, Chairman of Alibaba, said that despite the fluctuations in the global market, But the company is entering a period of more stable atmosphere in China. It said that domestic retail platforms such as Taobao and Tmall have seen strong user growth. As well as purchases during the recent 11-11 Singles’ Day festival, which also grew better.

Warning signs for China’s technology sector are not bright.

The latest situation at Alibaba further highlights the obstacles in China’s technology sector. which has been affected by measures limiting the export of microchips from the United States This makes it more difficult for China to access US chipsets.

According to the website Investing.com, Alibaba’s trend has dragged down other technology stocks, such as: BaiduandTencent

However, Although Alibaba is focusing on developing artificial intelligence (AI), especially next-generation AI (Gen AI), there is a shortage of new AI chips. Especially the latest flagship AI chip from NVIDIA, the H200 model, which was recently launched. It may affect the company’s development plan.

The U.S. restrictions have also affected other Chinese technology companies. Tencent has warned that the US measures could hurt its cloud business. The company has already stocked up on some Nvidia chips. But they must also look for chips from China as a backup option.