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In an official statement on Sunday, Alibaba said that Zhang will be replaced by Eddie Wu.
Alibaba Group Holding Ltd (HKG: 9988), one of the prominent players in the Chinese technology industry, faced a 3.5% decline in its stock value on Monday following a surprising turn of events on September 10. The company announced that its departing CEO, Daniel Zhang, would not only relinquish his role as chairman of the group as planned but also step down as CEO of Alibaba’s cloud business.
Following the announcement, shares of the company listed on the Hong Kong stock market fell sharply to HK$88.05 when trading resumed Monday after a short break on Friday due to unfavorable weather conditions.
Hong Kong Stock Market Hits Two-Week Low
The downturn coincided with a broader trend in the Hong Kong stock market, which hit a two-week low earlier today, down from Thursday’s level. The Hang Seng Index, in particular, experienced a 0.6% drop, settling at 18,096.45. Additionally, the Shanghai Composite Index saw a contrasting 0.8% increase.
Like Alibaba, the company’s rival JD.com hit an all-time low with a 2.3% decrease to HK$125.60.
Sun Hung Kai Properties, on the other hand, also faced a significant setback, plummeting by 9.5% to HK$79.95 following a profit report that missed consensus estimates for the year ending June 30.
Similarly, Chinese developers Longfor Group tumbled by 3.8% to HK$16.76, while their peer, Chinese Overseas Land and Investment, lost 2.7% and was trading at HK$16.72.
According to reports, the market decline in Hong Kong was caused by Zhang’s exit from Alibaba.
Alibaba Replaces Zhang with Eddie Wu
In an official statement on Sunday, Alibaba said that Zhang will be replaced by Eddie Wu, who was initially scheduled to assume the role of CEO and director of Alibaba Group starting in September and will now additionally serve as the interim chairman and CEO of the cloud business.
In June, the company said that Zhang would step down from the board of directors as chairman of the group to focus on the cloud business. However, in recent events, the Alibaba co-founder who joined the company in 2007 has resigned from both positions.
“The board of our Company expresses its deepest appreciation to Mr. Zhang for his contributions to Alibaba Group over the past 16 years.”
Market analyst Alicia Yap, the managing director at Citi, said that Zhang’s departure will likely exert downward pressure on Alibaba’s share price in the short term until a new successor is officially named.
She explained that investors might harbor concerns about potential disruptions to the timing and process of AliCloud’s spin-off. She also pointed out several key downside risks facing the company, including the possibility of setbacks in executing its new retail strategy and the potential for investment spending and margin pressures to escalate beyond initial expectations.
The Citi analyst said the company will actively monitor unfolding developments and remain attentive to forthcoming announcements.