Shares in Alibaba Group Holding (NYSE:BABA) soared over 7% on Tuesday after co-founders Jack Ma and Joe Tsai purchased shares on both the New York and Hong Kong stock exchanges worth hundreds of millions of dollars.
A regulatory filing with the Securities and Exchange Commission showed that Blue Pool Capital, an entity that holds a significant portion of the fortunes of both co-founders, acquired in the fourth quarter around two million Alibaba American Depository Receipts — shares of the company traded on the New York Stock Exchange — worth around $152 million, according to CNBC.
During the same period, Ma reportedly purchased $50 million worth of the stock on its domestic exchange in Hong Kong.
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China Measures To Restore Market Confidence
The co-founders bought the shares in the weeks before Beijing announced plans to offer market support following a long-term decline in Chinese shares.
China’s equity markets did not enjoy a rally in 2023. In fact, trade-related geopolitical tensions between China and the U.S. have seen Chinese equities slide for nearly three years.
The iShares MSCI China ETF (NYSE:MCHI), an exchange trade fund that tracks Chinese stocks, has, since February 2021, fallen 60%. In 2023, when the SPDR S&P 500 ETF (NYSE:SPY) gained 19%, the MCHI was down 14%. So far in 2024, the MCHI is down 8.5%.
However, after news on Monday that the Chinese government is to take measures to support capital markets, the MCHI rallied more than 3%.
Trader Reaction
“Take away the geopolitical risk and I would buy China right now,” said Dennis Dick, CFA at TripleDTrader, and co-host of Benzinga’s PreMarket Prep.
And on the price pop for Alibaba stock, he said: “It’s Jack Ma — hot for his stock.”
“Part of me wants to buy Alibaba here, because it’s a ridiculously low valuation. But it was ridiculously low at HK$90 and then HK$80, and now it’s HK$70.”
“But this is as good news as you can get. China propping up its stock market and Jack Ma buying Alibaba Stock. The stock is up significantly, but can it hold?” Dick questioned.
A lot hinges on China’s ability to restore confidence in its markets and on whether Alibaba can operate without restrictions imposed by the regulatory dynamics…
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