Alibaba soars due to increased buyback of shares to US$25,000M

(Bloomberg) — Alibaba Group Holding Ltd. soared to 13% on Tuesday in New York after increasing its share buyback program to $25 billion, raising hopes that Beijing is easing its crackdown on internet companies, which erased $470 billion of the value of the e-commerce giant .

The program, which will run for two years until March 2024, was approved by the board of directors, the company reported. He also appointed Weijian Shan, president of alternative asset management firm PAG, as the new independent director. Shan, a longtime investor in Chinese companies, will replace Ericsson's CEO, Börje Ekholm, from March 31.

Alibaba's increased buyback represents one of the biggest shareholder reward programs in China's gigantic internet industry, and coincides with a recalibration of sentiment after President Xi Jinping and Deputy Prime Minister Liu He pledged to support the economy and markets and end to the repression of the technology sector “as soon as possible”, which triggered a historic rebound in Chinese stocks.

The biggest Chinese companies are starting to emerge from a year of unprecedented regulatory scrutiny in sectors ranging from online commerce to social media. Alibaba shares closed on Tuesday in Hong Kong at their highest level in nearly a month, and US CDs were trading at $113.66 at 9:47 a.m. Eastern time.

Buyback “points to where the company's management sees value, and it can also be an indicator of where it sees regulatory action; perhaps we are nearing the end,” said Justin Tang, head of research for Asia at United First Partners in Singapore.

Until recently, Chinese tech companies rarely resorted to large return-to-shareholder programs, such as dividends or share buybacks. But the country's largest corporations have resigned themselves to a new era of cautious expansion, almost two years after a forceful crackdown that quickly affected everything from e-commerce to private transportation services to online education.

Alibaba increased its purchasing arsenal for the third time since the Beijing technology offensive began in late 2020, twice in less than a year. It acquired 56.2 million ADR under its previously announced share buyback program for some US$9.2 billion. That means it has spent more on buybacks than any other tech company since the industry crashed.

But that has done little to boost the fate of actions.

Alibaba reported that the December quarter saw the lowest growth in its history, and Tencent Holdings Ltd. is expected to do the same on Wednesday. Its e-commerce rival Pinduoduo Inc. reported revenues below estimates for the third consecutive quarter.

Alibaba CEO Daniel Zhang has outlined how China's e-commerce leader will prioritize user retention over acquisition, a significant change for a company that achieved massive scale by defeating rivals like Ebay Inc. and battling competitors in areas ranging from the media to communication to the cloud and commerce.

Original Note:

Alibaba Ups Buybacks to $25 Billion as Crackdown Signs Ease (1)

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