Alibaba’s Hong Kong shares jump nearly 15% on six-way split plans

By Ambar Warrick

Investing.com -- Alibaba Group's Hong Kong shares rose sharply on Wednesday, tracking an overnight jump in its American stock after the e-commerce giant said it plans to split into six units, with potential fundraising and listings for most of them.

The stock (HK:9988) rose 13.5% to an over one-month high of HK$95.55 shortly after the open, and was set for its best day in 11 months. This also pushed the Hang Seng index up 2.2%. 

Alibaba’s American Depository Receipts (NYSE:BABA) jumped 14.3% in overnight trade.

Shares of Japanese investment house SoftBank Group Corp (TYO:9984), which holds a sizeable stake in the e-commerce firm, jumped over 5% on Wednesday. Softbank had recently trimmed its stake in Alibaba to generate cash amid a severe downturn in its other technology investments. But the firm still retained a 13.5% stake in Alibaba. 

Alibaba said on late-Tuesday that it will restructure into a holding company with six sub-divisions, each with their own CEOs and boards, while Daniel Zhang will retain his current position as CEO of Alibaba Group. 

The move comes after years of regulatory pressure from Beijing, which saw the company slapped with a series of fines and investigations over antitrust violations. This saw Alibaba's shares plummet to record lows, losing 70% of their value since 2020.

But Beijing recently signaled that it will ease its rhetoric against Chinese technology giants, as the government struggles to shore up economic growth smothered by three years of COVID lockdowns. 

Alibaba said it will split into six units representing its six largest moneymakers - Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group, and Digital Media and Entertainment Group. CEO Zhang will also serve as head of Cloud Intelligence Group. 

The move also coincided with Alibaba founder Jack Ma’s return to China after a year-long stay abroad - a move that further signaled easing regulatory scrutiny against China's biggest internet firms.