By Jack DentonSept. 3, 2021
Alibaba stock tumbled in Hong Kong trading, with the company’s U.S.-listed shares set for similar declines, as the Chinese internet giant confirmed Friday a large donation to social and economic programs in its home country.
The stock fell 3.5% in Hong Kong and Alibaba’s American Depositary Receipts were down more than 1% in U.S. premarket trading. The decline weighed down the Hang Seng Tech Index, of which Alibaba is one of the largest constituents, which underperformed the wider Hang Seng to fall 1.1%. Stocks in Shanghai and Hong Kong were broadly lower on Friday amid the release of weak economic data.
The donation of 100 billion yuan ($15.5 billion) represents more than a third of Alibaba’s $45.2 billion cash pile, as reported in the e-commerce company’s latest quarterly statements up to June 30.
The company will pour money into Chinese initiatives across technology innovation, economic development, job creation, social care, and establishing a “common prosperity” development fund, Alibaba said in a press release on Friday.https://tpc.googlesyndication.com/safeframe/1-0-38/html/container.html
The news first broke on Thursday in the state-backed Zhejiang News, Reuters reported.
“Alibaba is a beneficiary of the strong social and economic progress in China over the past 22 years,” said Daniel Zhang, the group’s chair and chief executive, in a statement. “We are eager to do our part to support the realization of common prosperity through high-quality development.”
Alibaba follows in the footsteps of fellow Chinese tech behemoth Tencent, which has announced similarly-sized donations to local initiatives this year. Tech platforms Pinduoduo and auto maker Geely have also recently pledged to take part in a push for common prosperity, as has the founder of e-commerce group Meituan.
“Common prosperity” is a hallmark of President Xi Jinping’s program of social and economic reforms in China tackling wealth inequality.
The donations from Alibaba and its peers come as the groups find themselves under intense scrutiny from Chinese regulators amid months of crackdowns on the tech sector and beyond.
Alibaba was hit with a record $2.75 billion fine in April for breaking China’s competition rules, while the listing of its fintech arm Ant—billed as the biggest IPO of all time—was scuppered by regulators last November.