Alibaba soars on the stock market
📌Jack Ma’s company seems to have found the way for large Chinese technology companies, as it has written a letter to its shareholders confirming that the company will split into 6 companies. The news has been well received by the markets, as during the session it went on to increase its share price by around 15%.
📌Chinese technology companies had been punished for some years with numerous restrictions and fines by the Chinese government, which considered them to be companies with monopolistic positions.
📌Jack Ma’s idea is that each company arising from this separation will be totally independent (except for Taobao Tmall which will remain owned by Alibaba Group) to go public and raise external capital for the company. This separation will therefore provide them with greater flexibility and allow the Chinese company to reduce the large number of restrictions it currently has.
📌Alibaba’s announcement has been a ray of hope for large Chinese technology companies, as it seems that it may be the best alternative in the sector to circumvent the harsh restrictions imposed by the Chinese authorities. The Hang Seng (with a greater weight in technology stocks) closed the day above 2%, and comparable companies such as Tencent Holdings and Baidu have also had a strong revaluation.