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Alibaba shares are seesawing over conflicting reports that Beijing will finally allow the $34 billion IPO of its fintech affiliate

June 10, 2022, 4:50 AM UTC

Shares in China e-commerce giant Alibaba Group Holding have been on a wild overnight ride, chasing conflicting reports on whether Chinese regulators will reverse their block on Alibaba financial affiliate Ant Group’s $34 billion IPO.

Alibaba’s share price fell by 8.1% in U.S. trading Thursday, after both Bloomberg and Reuters reported that Beijing was considering reviving Ant’s IPO, which regulators nixed 19 months ago—only to have both Ant and the Chinese market regulator deny the reports soon after.

Bloomberg, ahead of U.S. markets opening on Thursday, reported that the China Securities Regulatory Commission (CSRC) was in early discussions to assess the fintech company’s plans, as well as issue a license to the company that would allow it to be treated more like a bank. Reuters then reported that Ant was hoping to file a prospectus for an IPO in Hong Kong and Shanghai as early as July.

But, hours later, the CSRC said it was not conducting a review on an Ant offering, and Ant said it had no plans to revive the IPO. The uncertainty seemed to spook U.S. investors in Chinese stocks. On Thursday, Alibaba’s 8.1% loss led a decline in U.S-listed China tech stocks, with the Nasdaq Golden Dragon Index down by 6.8%.

The e-commerce group then reversed its U.S. losses in Hong Kong trading, where Alibaba has a secondary listing. The group’s Hong Kong listed shares had risen 1.7% by noon local time. Sentiment in other China tech shares appeared to have recovered by noon Hong Kong time, too. The Hang Seng Tech Index was up 0.9%, with leaders Tencent up 0.1%, and Meituan up 1.4%.

A return of Ant’s IPO would be a stunning turnaround for the fintech company. Ant’s record-breaking IPO was originally scheduled for November 2020, but regulators forced its cancellation following comments from founder Jack Ma that the government was being too conservative about financial risk. 

After regulators yanked Ant’s IPO, Ma disappeared from public view, and Beijing’s crackdown soon shifted to Alibaba, which Ant owner Jack Ma also founded. The e-commerce company was slapped with a $2.8 billion antitrust fine in April 2021.

Thursday’s plunge in Alibaba and China tech shares ended a four-day rally, as investors had been encouraged by signs of an easing crackdown.

On Monday, the Wall Street Journal reported that Beijing was planning to end its cybersecurity probe into Didi Global, which was launched days after the ride-hailing company had its blockbuster listing in New York last July. Investors were also encouraged by Shanghai’s “reopening” on June 1. On Thursday, Shanghai said it would send several districts back into lockdown this weekend after it found six COVID cases. 

Alibaba shares were one of the best performers amid the rally. Shares in the e-commerce company increased by 19.7% between Monday’s open and Thursday’s close in Hong Kong. The Hang Seng Tech Index, which tracks the 30 largest tech firms listed in Hong Kong, increased by 8.0% over the same period. 

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