In an announcement late on Sunday, Alibaba Group Holding Ltd. (HKG: 9988) said it will repurchase £7.41 billion worth of shares through 2022. Previously, the company had valued its stock repurchase program at a much lower £4.44 billion.
The share buyback programme started earlier in the current quarter, and a larger repurchase was approved by the e-commerce giant’s board of directors on Sunday. Despite the announcement, Alibaba shares opened roughly 4% down in the stock market and slid another 5% on the intraday chart on Monday.
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The Hong Kong-listed shares of Alibaba were seen exchanging hands at £20 on Monday that represents a new low since mid-June. The Nasdaq-listed shares, on the other hand, opened about 2% down but regained the intraday loss in the next hour. The Hong Kong-listed shares of the Chinese tech giant have seen roughly £86.23 billion knocked off in the recent two sessions.
SAMR launched an investigation into Alibaba over alleged monopolistic practices
The downward rally in the tech giant’s stock accelerated last week when the State Administration for Market Regulation (SAMR) launched an investigation into the Alibaba Group over alleged monopolistic practices.
The antitrust probe is the latest blow to billionaire Jack Ma’s fintech empire after China suspended Ant Group’s (Alibaba’s affiliate) IPO in November. Ma had publicly criticised China’s financial regulations that he said were counterproductive to promoting technological development and innovation.
According to the chief investment officer, Zhang Zihua, of Beijing Yunyi Asset, SAMR has not yet specified penalties that might be associated with its investigation into Alibaba, that he said was fuelling unrest among investors. The outcome of the probe, he added, could have significant ramifications regarding the market valuation and standing of the company.
China’s central bank urges Ant Group to shake up consumer finance operations
In a separate announcement, China’s central bank had said on Thursday that it will summon Ant Group for a meeting in the coming weeks. On Sunday, it urged the payments giant to shake up its consumer finance operations, including lending. As per tech analyst Li Chengdong:
“The new regulations are hurting big internet platforms, so you see Tencent and other tech companies are also seeing their share prices going down. Alibaba now is the target of the regulators, so the reaction is stronger.”
At the time of writing, Alibaba Group Holding Ltd. has a market capitalisation of £430 billion and a price to earnings ratio of 27.20.