No. of Recommendations: 11
Today BABA is up over 13%, at the time of this writing, in response to regulatory approval for an Ant Financial spin-off to raise money, which is apparently taken as a sign by the market that the Chinese government is letting them out of the doghouse.
A big factor in BABA's tanking share price in recent years was the abrupt halt to Ant going public, days before they were due to be the biggest IPO in history. Former Chairman and founder of Alibaba Jack Ma had made critical comments about the Chinese rulers, and this was seen as payback, and it was later seen as the start of an extended campaign by the government to reign in the capitalist excess of the big Chinese corporations. The government has eased up on this campaign over the last year or so as their economy has struggled with Covid and supply chain issues.
Solid writeup of the current news here:
https://realmoney.thestreet.com/investing/global-e...
Ant Group has secured regulatory approval to raise cash for its consumer lending arm...The green light Ant has received for its consumer loan capitalization plan is more important than the details themselves...For Ant to now win a nod from Beijing to raise capital indicates the company's political rehabilitation is well under way...
Beyond this deal, Ant is still seeking a license for a financial holding company to operate its consumer businesses. Regulators ordered it to carve out CreditTech into a separate entity with government co-ownership. CreditTech operates two lending businesses, the virtual credit card issuer Huabei and the consumer loan company Jiebei. Those businesses must now operate separately from Alipay, its digital payments app and electronic wallet that is omnipresent in China.
This news alone certainly doesn't raise the value of Alibaba 13%, but if the government does continue to give favorable decisions to Ant and Alibaba, it's a significant factor, though an unpredictable one. Bigger news in the short-ish term of the next year or two, is the move away from China's zero-Covid policy, which will let the economy get back closer to normal, and perhaps Alibaba can resume growth.
