Can Alibaba shares withstand Chinese crackdown?
Alibaba saw its shares rally over 7%, a day after reports stated the group was planning to offer one of its hottest apps on rival Tencent’s WeChat messaging platform.
- Alibaba Group Holding (HKG: 9988) shares closed 5% higher on Thursday, in line with the wider bull trend
- Its US shares (NYSE: BABA) also finished 2.81% higher a day earlier, driven by the US central bank’s upbeat growth estimates for 2021
- The rallies are also despite the Chinese government’s latest clamp down on Alibaba’s media businesses, which is deemed as being too influential
- To placate anti-competition concerns, the company has also decided to offer one of its faster growing services on rival Tencent’s messaging app, WeChat
- Trade Alibaba shares with an IG account
Alibaba stock price: the latest
Alibaba Group Holding’s Hong Kong shares rallied as much as 7% on Thursday (18 March 2021), following a wider trend that saw major Asian benchmarks finishing higher.
The Chinese e-commerce group’s stock eventually closed at HK$233.60 a share, roughly 5% higher than the previous close.
Meanwhile, Alibaba’s US listing also concluded Wednesday (17 March) 2.81% higher at US$233.34 a share.
Asian stocks rose on Thursday, after US equities closed higher in light of the US central bank’s dovish stance in keeping interest rates unchanged.
On Wednesday, the US Federal Reserve reiterated its decision to maintain overnight borrowing rates at near zero through the year 2023. The Fed also improved its economic growth outlook for 2021 to 6.5%, while keeping a tolerant stance on inflation.
Authorities continue to clamp down on Alibaba
Earlier this week, Bloomberg also reported that Alibaba has plans to launch its bargain deals app Taobao Deals on rival Tencent Holdings' WeChat messaging platform, as part of its strategy to placate Chinese regulators’ ongoing crackdown on internet monopolies.
Prior to this, Alibaba and Tencent have operated an unspoken rule of not allowing their respective services to be offered on each other’s platforms and interfaces.
Last week, a total of 12 companies – including Tencent, Alibaba, Baidu, ByteDance, Meituan and JD.com – were each fined 500,000 yuan (US$77,000) by the State Administration for Market Regulation for ten internet investment deals that were found to have breached China’s anti-monopoly law.
Additionally, the Wall Street Journal reported that the Chinese anti-competition body is considering imposing a fine of over US$975 million on the e-commerce titan, which it feels is getting too influential and powerful.
Besides the fine, the Chinese government also asked Alibaba to substantially shed its media assets, with authorities reportedly increasingly worried about the company’s hold on public opinion.
Alibaba currently owns stakes in social media platform Weibo, as well as Hong Kong newspaper South China Morning Post.
Is Alibaba a ‘buy’ or ‘sell’?
In terms of outlook, the group’s US stock currently has a consensus rating of ‘buy’ from 28 analysts, according to the latest data from MarketBeat. It also has an average 12-month share price target of US$323.04, representing an upside of over 38% from the last traded price.
Last month, analysts from Citigroup, Raymond James, Mizuho, Macquarie and HSBC all boosted their price targets alongside ‘buy’ and ‘outperform’ ratings, after the company announced its December 2020 quarter earnings.
Raymond James analyst Aaron Kessler raised his firm’s target price to US$350 from US$330 while keeping a ‘strong buy’ call, citing the company’s ‘generally solid’ results.
Citigroup analyst Alicia Yap also raised price estimates to US$345 from US$316 with a ‘buy’ rating after Alibaba’s eventual December quarter results surpassed her expectations.
Alibaba’s NYSE stock is up 2.4% year to date, while its Hong Kong stock is up 2.6% so far this year.
Trade today’s hottest stocks with IG - long or short
Create an IG account or log in to your existing account to get started now.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.