Alibaba Shares Drop 9 Percent Despite $10 Billion Buyback Programme

Investors are dumping their Alibaba shares fast despite the e-commerce company increasing its shares buyback programme from $6 billion to $10 billion after Chinese regulators announced on Thursday they have commenced an antitrust investigation into Alibaba operations.

Regulators announced they would invite the company’s Ant Group in a move that suggests more trouble.

On Monday, Alibaba’s U.S shares sank more than 15 percent while a sharp sell-off over two sessions has erased about $116 billion from the company’s Hong Kong-listed shares.

“The antitrust investigation into Alibaba has yet to specify the penalties, which is worrying investors a lot,” said Zhang Zihua, a chief investment officer of Beijing Yunyi Asset, adding a probe outcome could “greatly change” the company valuations.

Also putting investors on the edge was the news that Chinese central bank has asked Ant to wind down on its lending and other consumer finance operations.

According to Reuters, these developments are part of a crackdown on monopolistic behaviour in Chinese booming internet space. However, the government is believed to be going after Jack Ma in particular after he publicly criticised the regulatory system for hurting innovation.

In November, regulators suddenly suspended Anti’s $37 billion initial public offerings in Shanghai and Hong Kong.

“The new regulations are hurting big internet platforms, so you see Tencent and other tech companies are also seeing their share prices going down,” said Li Chengdong, a Beijing-based tech analyst.

“Alibaba now is the target of the regulators so the reaction is stronger.”