Alibaba's US-listed shares nosedive on China monopoly investigation

Business operations could face long-term headwinds as a result of anti-monopoly rules, analysts say

A motorist drives past an Alibaba office building in Shanghai. Alibaba has shed more than $230bn in value from its recent peak as authorities have increased scrutiny over China's largest technology firms. BloombergShow less

Alibaba’s US-listed shares tumbled the most ever in intraday trading on concern over China’s inquiry into alleged monopolistic practices at the e-commerce company.

Affiliate Ant Group, the other pillar of billionaire Jack Ma’s internet empire, was also summoned to a high-level meeting over financial regulations.

The pressure on Mr Ma is central to China’s broader effort to rein in an increasingly influential internet sphere. Draft anti-monopoly rules released in November gave the government wide latitude to restrain entrepreneurs who until recently enjoyed unusual freedom to expand their realms.

The Alibaba inquiry is “a warning that winds have shifted”, Bloomberg Intelligence said in a research note. The risk, analyst Vey-Sern Ling wrote, is that business operations “could face long-term headwinds” as a result of such moves.

The stock fell as much as 16 per cent in its biggest one-day intraday percentage loss on record. The decline took Alibaba to its lowest level since July, and the stock is now down more than 30 per cent from an October peak.

Alibaba said in a statement it will cooperate with regulators in their investigation, and that its operations remain normal.

Once hailed as drivers of economic prosperity and symbols of the country’s technological prowess, Alibaba and rivals like Tencent face increasing pressure from regulators after amassing hundreds of millions of users and gaining influence over almost every aspect of daily life in China.

Alibaba slid 8 per cent in Hong Kong to a five-month trough on Thursday. Asia’s largest corporation after Tencent has led losses among China’s internet sector leaders since Ant’s IPO got yanked, taking the overall toll to roughly $200 billion. Tencent and internet services giant Meituan finished more than 2.6 per cent lower, while SoftBank, Alibaba’s largest shareholder, sank 1.7 per cent in Tokyo.

Some analysts predict there’s a crackdown coming, but a targeted one. They point to language in the regulations that suggests a heavy focus on online commerce, from forced exclusive arrangements with merchants known as “Pick One of Two” to algorithm-based prices favouring new users. The regulations specifically warn against selling at below-cost to weed out rivals.