Alibaba shares surge as Jack Ma endorses current leadership

Investing.com-- Hong Kong shares of e-commerce giant Alibaba Group (NYSE:BABA) rose sharply on Wednesday after Chinese media reports showed Jack Ma endorsing the firm’s current leadership in an internal memo.

Alibaba (HK:9988) rallied 5.4% to HK$74.25- its highest level in nearly one month. The stock was the biggest boost to the Hang Seng index, which surged 2% and also hit a near one-month high.

Chinese media reports showed that Ma posted a memo in Alibaba’s internal network on Wednesday that lauded restructuring efforts by CEO Eddie Wu and Chair Joseph Tsai. 

The memo marks a year since the e-commerce giant outlined plans to undertake a massive restructuring of its core businesses. While the firm dropped plans for a six-way split of its core units, it had announced a slew of measures over the past year to capitalize on growing interest in artificial intelligence, as well as shore up sales amid weakening consumer demand in China. 

The firm had also reshuffled its leadership, as it redoubled efforts to focus on its cloud division, which is also at the heart of Alibaba’s AI ambitions.

Alibaba on Tuesday slashed the prices of its cloud products for the third time in 12 months, as the firm looked to capitalize on increasing demands for computing power from the AI industry. 

But the cloud unit was struggling with weak sales over the past two years, as rising interest rates dented investment in technology. The firm also faces headwinds from U.S. export curbs of advanced semiconductor technology to China, which is crucial to China’s AI ambitions. 

Alibaba’s restructuring was also undertaken to placate Chinese regulators, who had led a nearly three-year crusade against the company over antitrust violations. 

On the e-commerce front, Alibaba is still struggling with sluggish sales in China, amid increased competition and weakened consumer spending as China's economy slows.