Shares of Alibaba hit a six-month high Monday after its founder and former executive chairman Jack Ma announced this weekend that he would cede control of his current venture, the Chinese fintech giant Ant Group.
Ant Group is a major shareholder of Alibaba and other prominent Chinese-listed companies, many of which saw similar stock price jumps following the news. Ant Group owns Alipay, China’s primary online payment system.
At issue here is Ant Group’s attempt to go public with a stock market flotation of nearly US$37 billion back in November 2020. It would have been the world’s largest, except that it was canceled by Chinese authorities after Ma spoke out against the country’s financial system at a conference, according to reports.
READ: US-listed Chinese stocks start the year strong as Alibaba affiliate Ant Group capital raise plan wins approval
In October 2020, Ma told the Bund Summit in Shanghai that “Chinese finance has no system” and said banks have a “pawn shop mentality” when it comes to lending. He then reportedly disappeared for three months before reappearing, according to media reports.
Now, Ma will go from controlling over 50% of Ant Group to about 6%, according to reports. This could make it easier for the company to eventually go public, some experts believe.
"It should have removed some of the authorities' concerns about the group as the change was likely a negotiated outcome with the authorities," said Redmond Wong, Greater China market strategist at Saxo Markets in Hong Kong, as reported by Reuters. "And investor sentiment towards the China internet sector is likely to improve further."
Alibaba shares closed more than 8% higher in Hong Kong and were up 4% in New York Monday morning.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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