- A state media report claimed that a person named Ma had been investigated.
- Jack Ma’s Alibaba share price plummeted, but recovered losses after a correction was made to the report.
- The wild swing showed that investors still feared Beijing’s crackdown on the tech sector.
On Tuesday, for a brief moment, people thought that Jack Ma, the elusive founder of the Chinese e-commerce giant Alibaba, had resurfaced – on the wrong side of the law.
But it has remained largely out of public view since Beijing cracked down on its companies in late 2020.
But on Tuesday morning, Chinese state broadcaster CCTV reported that police in Hangzhou city, where e-commerce giant Alibaba is based, had been investigating a person with the surname Ma since April 25.
Details were missing from the concise 86-word report, but investors were still scared. Many assumed that the person in question was Jack Ma, whose Chinese name is Ma Yun. After the news broke, Alibaba’s share price in Hong Kong slipped 9.4% in early trading, wiping out about $ 26 billion from its market value, Bloomberg reported.
Another state-run media outlet, Global Times, soon followed a report citing anonymous sources claiming that the individual in question actually had three characters in his name. The person was born in 1985, making him two decades younger than Alibaba’s founder, according to Global Times, and has been identified as a director of hardware research and development at an IT company.
This seemed to alleviate investor fears somewhat. Shares of Alibaba rose following the Global Times report and ended the trading day in Hong Kong down just 0.83%.
The wild swing in Alibaba’s share price underscores just how sensitive tech investors have become to signs that Beijing is getting close to any of the tech giants.
In recent years, China has initiated antitrust investigations against technology companies, increased data security scrutiny, and restricted consumer use of the Internet and gaming platforms. At the same time, Chinese tech companies are struggling to get users and consumers to spend more on a cooling economy.
Alibaba has borne the brunt of the Beijing crackdown. After Ma openly clashed with regulators in late 2020, Beijing responded by forcing Ant Group, Alibaba’s financial unit, to halt its IPO in New York. Authorities have also launched an investigation into Alibaba for allegedly abusing its leading position in the market.
However, in recent months, Beijing has signaled that it is easing the repression. On Friday, the government said it “will promote the healthy development of the platform economy.” This has led to a rise in internet stock prices, Bloomberg reported.
Yet the Alibaba share price fiasco on Tuesday showed investors are still feeling shaky.
“China has imposed a lot of draconian policies on tech companies and now everyone is on high alert: if something happens, they dump the shares,” an analyst told the Financial Times.