Sightings of Jack Ma on a yacht can move markets. When the charismatic co-founder of Alibaba visited Mallorca last October, Alibaba shares surged. Ma, reported to be in Europe again, is also behind Friday’s 6 per cent drop.
Ma is planning to give up control of Ant Group, in which he holds 51 per cent of the voting rights. The retreat comes two years after Beijing suspended Ant’s record-breaking listing which would have raised $37bn, valuing the payments affiliate at about $315bn.
On the surface, the market reaction is surprising. Ma stepped down as Alibaba chair in 2019 and has distanced himself from day-to-day operations.
Some might even have expected a jump in the share price. Ma had provoked officials with his blunt criticism of China’s state-owned banks’ “pawnshop mentality” in 2020. That was on top of the disruption of their businesses caused by the rapid growth in Ant’s digital payments and retail deposits. Alibaba and Ant were the focus of Beijing’s first big investigation by regulators cracking down on the tech sector. Ma’s exit would make the companies less of a target.
But the move damages the prospects of an Ant listing. For Alibaba, which holds about a third of Ant, an IPO was one of the few ways it could boost its floundering sales growth and share price. The stock has declined nearly 70 per cent since a 2020 peak. It trades at just 14 times forward earnings, less than half that of local peers such as JD.com
Companies that undergo controlling ownership changes have to wait three years before they are able to list on mainland Chinese markets. In Hong Kong, the requirement is one year. That pushes out hopes of a listing revival much too far.
Previous jumps in Alibaba’s share price triggered by Ma sightings reflect the value investors placed on his innovative ideas and leadership. Those gains will become less frequent with Ma’s exit.