Alibaba’s business split raises the hopes of
Investors resulting to a surge in the company’s stock price and other similar companies.
According to Reuters, they saw this as a positive sign that Beijing’s regulation of the corporate sector may be coming to an end.
AMBusiness reported on Tuesday that Alibaba plans to split into six units and considers fundraising or holding initial public offerings.
The new development is seen as the largest restructuring of the technology conglomerate in its 24-year history.
Alibaba’s shares listed in Hong Kong rose by 16.3%, following a 14.3% increase in the company’s shares listed in the US overnight. This led to an increase in the Hang Seng Index and other markets in the region.
For many investors, this was a sign that the end of Beijing’s regulatory crackdown on China’s private sector may be near, bringing hope and optimism.
Head of Asia special situations at Pictet Asset Management, Jon Withaar, said, “We think this is likely a sign that we are moving closer to the end of the regulatory scrutiny on BABA and we would expect that the company moves back into the good graces of the regulators and policy makers after this.”
Over the past few years, the Chinese government’s extensive regulatory crackdown on several prominent domestic companies, particularly those in the internet, private education, and property industries, resulted in significant market value losses and negatively affected investor confidence.
According to the report, Alibaba will on Thursday host a conference call to talk about its plan to spilt. Sources say that Daniel Zhang, the company’s CEO and chairman, may participate in the call.
The six units include the following: Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group, and Digital Media and Entertainment Group. Each unit will have its own CEO and board of directors.