- Hong Kong shares of Alibaba Group fell 10%.
- Tencent Holdings claimed that the restrictions would force it to look for domestically produced alternatives.
- At its peak in October 2020, Alibaba was the most valuable stock in Asia.
Alibaba Group canceled plans to spin off its cloud business on Friday, citing uncertainty brought on by US sanctions on semiconductor exports to China for artificial intelligence applications.
As a result, the company’s Hong Kong shares dropped 10%. The Chinese tech giant lost roughly $20 billion in market value as a result of this decline, which may have been its largest one-day loss in over a year.
Alibaba Group
The cancellation of AliCloud’s full spin-off is unanticipated, as Tencent Holdings, a Chinese social media and gaming company, expressed similar concerns this week regarding the U.S. export restrictions announced by Washington. Tencent Holdings claimed that the restrictions would force it to look for domestically produced alternatives.
At its peak in October 2020, Alibaba was the most valuable stock in Asia. However, because of Beijing’s crackdown on the technology sector and the slowing Chinese economy, its current valuation is less than one-fourth of its peak value.
The most recent Alibaba news highlights more significant challenges that China’s tech companies face, including the difficulty in obtaining essential chip supplies from American companies due to export restrictions.
Alibaba divided the company into six divisions as part of the largest reorganization in its 24-year history, which included plans to separate the cloud division. This announcement was made in March.
Analysts had previously projected that the cloud division might be valued between $41 and $60 billion, but they had cautioned that because of the massive amounts of data it handles, Chinese and foreign regulators might monitor its listing.
