China's Tensions With US Weighs On Alibaba's Stock, Erases Gains From Latest Revamp

Alibaba Group Holding Limited BABA stock gave up the gains fueled by its ambitious restructuring proposal after it slumped in Hong Kong on Tuesday.
Alibaba’s latest drop came as China’s deteriorating geopolitical tension with the U.S. posed a dampener for China’s technology shares, Bloomberg reports.
“Overall sentiment on China is low now as geopolitical tensions continue to weigh, and it may be difficult for IPO or spin-off activity to pick up momentum in such an environment,” said Marvin Chen, an analyst with Bloomberg.
“While Alibaba stock may remain volatile, downside may be limited as valuations approach single digits again.”
The reversal emphasizes the importance of U.S.-China relations despite growing optimism over easing regulatory crackdown on the sector.
The stock dropped by over 12% last week in the U.S. over reports of the Western counterpart preparing to limit investment in crucial parts of China’s economy by American businesses.
This week the U.S. urged Seoul to encourage Samsung Electronics Co Ltd SSNLF and SK Hynix to hold back from boosting sales to China if it bans Micron Technology, Inc MU from selling under an ongoing investigation.
In December 2022, the U.S. put Chinese memory chip producer Yangtze Memory Technologies Co on its “entity list,” barring companies from exporting American technology to the nascent Micron rival without a hard-to-obtain license.
In April 2023, China launched a national security review into Micron, one of the three dominant players in the global Dram memory chip market, alongside Samsung and SK Hynix.
Price Action: BABA shares traded lower by 1.20% at $85.85 premarket on the last check Tuesday.
Photo by Tatiana Popova and rawf8 via Shuttterstock

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