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Alibaba Soars After $2.8 Billion Fine Lifts Overhang From Stock  

Published 04/12/2021, 08:22 AM
Updated 04/12/2021, 08:23 AM
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By Dhirendra Tripathi

Investing.com – Alibaba (NYSE:BABA) shares popped in Monday’s premarket as a $2.8 billion fine by the Chinese regulators on Saturday lifted the cloud of uncertainty that had been hovering over the internet company.  

The fine was only 4% of Alibaba's domestic sales, rather than the 10% maximum allowed by law. Analysts interpreted as a broader sign of detente between regulators and a company whose financial power threatened to give it growing political clout. 

“Despite the record fine amount, we think this should lift a major overhang on BABA and shift the market’s focus back to fundamentals,” Morgan Stanley (NYSE:MS) wrote Sunday.

Chinese regulators opened an anti-monopoly probe into Alibaba in December on complaints that the company’s practices forced merchants to list their products on one of two e-commerce platforms, rather than being able to choose both.

China’s State Administration for Market Regulation said the practice stifles competition and “infringes on the businesses of merchants on the platforms and the legitimate rights and interests of consumers.”

It’s been a tough period for Alibaba founder Jack Ma ever since his comments in October, critical of the country’s financial regulator, appeared. He was forced to call off the IPO of Ant Group a day before it was to open. Once listed, the firm he founded would have been amongst the most valuable companies in the world.  

Separately, Ant Group announced on Monday it will transform itself into a financial holding company, to be regulated by the central bank.

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