By
Darya Rudz
November 1st, 2023
Alibaba Group Holding Limited (NYSE: BABA) stock is down after Beijing hit the Chinese tech sector with a wave of proposed regulations.
Shares of the Chinese e-commerce giant Alibaba Group Holding Limited (NYSE: BABA) dropped about 7% to $160.55 today after closing at $160.82 on August 19th. The impending regulations also affected other Chinese tech companies, including Tencent Music Entertainment, NIO, and DiDi Global. In addition, the Hang Seng Tech Index closed at 2.9% lower after recording its lowest fall since its July 2020 inception earlier in the day.
On the flipside, Alibaba may yet rebound as technical indicators state that its shares are extremely oversold. This suggests that the e-commerce company’s stock is trading below the normal threshold and could attract buyers. These buyers will be expecting the price to at least revert to the average range and even push higher if there is enough bullish activity.
Furthermore, history reveals that whenever Alibaba shares usually bounce back whenever they are oversold on the charts. This has occurred three times in the past nine months with the same rally following soon after.
Alibaba Stock and Others May Slide Further Down
The stocks of many Chinese tech companies began to buckle under pressure from Beijing’s announcement to increase oversight of live streaming. China also said it was evaluating proposals designed to further protect the rights of drivers who work for online companies. Furthermore, impending regulatory changes on how companies use data for advertising in the tech industry did little to placate investor sentiments.
Technology conglomerate holding company, Tencent, has warned and advised all players to brace for seemingly adverse changes, including more regulations. The company’s music stock tumbled early in the week amid China’s widening crackdown on internet and tech companies who list shares outside of China, particularly in the US Authorities ordered Tencent to surrender its exclusive music licensing rights fined the company for anti-competitive behavior. The recent crackdown contributed to a $1 trillion loss in market value from globally-listed Chinese shares last month.
According to a Caixin Global report, the regulatory pressure is causing several institutional investors to get rid of Alibaba shares. However, the e-commerce giant is not the only Chinese company to see its investors dumped its shares. Lead fund manager at ARK investments, Cathie Wood, reported she also dumped Chinese stocks in July. She nonetheless admitted to softening her stance since then and “keeping an open mind” this month.
In other news, the Wall Street Journal reported some discord among a few top board executives at DiDi Global. The Beijing-based ride-hailing giant recently went public on the New York Stock Exchange, and the move may have irked some board members.
DiDi’s eight-member board of directors includes leaders of Alibaba and Tencent. The company’s IPO value was $4.4 billion.