By Ambar Warrick
Investing.com -- Major Chinese technology firms rallied on Wednesday, led by Alibaba (NYSE:BABA) as the e-commerce firm’s plans to split into six separate companies drove up hopes that Beijing will adopt a less strict stance against the country’s internet giants.
Alibaba’s Hong Kong-listed shares (HK:9988) jumped as much as 16% after it unveiled its spinoff plans on late-Tuesday. Alibaba’s peers Baidu Inc (HK:9888) (NASDAQ:BIDU) and Tencent Holdings Ltd (HK:0700), the other two parts of the “BAT” trio, rose about 2% each in Hong Kong trade, while e-commerce rival JD.com (HK:9618) (NASDAQ:JD) added nearly 3%.
Alibaba Health Information Technology Ltd (HK:0241), another spinoff from the internet giant, rose 6.3%, while food delivery giant Meituan (HK:3690) added 5.1%.
Gains in heavyweight technology stocks drove Hong Kong’s Hang Seng index up over 2%.
Alibaba’s decision to split into six separate companies comes on the heels of a nearly three-year-long regulatory crackdown on China’s major technology firms.
Alibaba, Tencent, Baidu, and several other players were slammed with antitrust fines and investigations, as Beijing accused the firms of engaging in monopolistic behavior.
But the government had recently softened its rhetoric against local technology firms, as it seeks to drive up economic growth that was smothered by the COVID-19 pandemic.
Earlier this month, China’s newly-appointed Premier, Li Qiang, said that the government was offering “unswerving” support to the private sector, as the country struggles to restore investor faith after three years of COVID-linked disruptions. The country relaxed most anti-COVID measures earlier this year.
Alibaba’s breakup is also expected to make the company less vulnerable to antitrust measures, given that each individual unit will have its own board and CEO, and could potentially seek separate listings.
The breakup plan also coincided with Alibaba founder Jack Ma being spotted in China after a year-long overseas stay, which fed into hopes that China’s regulatory crusade against tech firms was coming to an end.
Ma had left China in late-2021, and had kept a low public profile amid scrutiny from China’s financial regulators.