American depositary receipts (ADRs) of Alibaba Group Holdings Ltd. (BABA) rose 8% on Friday after a nearly $1 billion fine by Chinese regulators on a related company raised hopes that it could signal the end to China’s crackdown on its technology sector.
Key Takeaways
- ADRs of Alibaba advanced 8% Friday amid optimism that a nearly $1 billion Chinese fine could signal the end of a yearslong China crackdown on Alibaba and other tech firms.
- Ant, created by Alibaba’s founder, indicated that it would comply with the terms of the penalty and continue to enhance its consumer protection and compliance governance.
- Friday’s gains helped return Alibaba ADRs to positive territory for the year.
The optimism came after regulators fined fintech company Ant Group, which was created by Alibaba founder and former CEO Jack Ma, almost $1 billion for consumer protection and corporate governance violations. Chinese regulators also charged the firm with engaging in business activities that should have been conducted by banks or insurance firms.
Ant said that it would comply with the terms of the penalty and continue to enhance its compliance governance.
Chinese officials have been targeting the tech sector in that country since 2020, when it forced Ant to scrap its plans for an initial public offering (IPO). It’s believed the crackdown was triggered by a speech by Ma in which he criticized China’s regulatory system.
The news Friday helped lift Alibaba Group Holdings’ ADRs into positive territory again for 2023.
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Source: https://www.investopedia.com/alibaba-adrs-jump-on-optimism-fine-could-signal-the-end-of-crackdown-7558136?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo