Hong Kong Stocks Tumble, Xpeng Hit Hardest As Alibaba Plans To Divest American Shares

The Hong Kong stock market experienced a downturn driven by worries about the Chinese economic recovery. Electric vehicle (EV) maker Xpeng Inc. XPEV bore the brunt of the losses following the Alibaba Group BABA announcement to sell off a substantial portion of its shares in the company.

What Happened: Hong Kong’s stocks took a tumble on Dec. 18, with the Hang Seng Index falling 1% to 16,620.23 by 11.08 am local time, reported the South China Morning Post. This came amid concerns regarding the future of China’s economy after receiving mixed activity data for November.

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Xpeng’s Hong Kong-listed shares fell a substantial 5.1% to HK$56.30 ($7.22) as Alibaba unveiled plans to sell 25 million American depositary shares in the EV manufacturer. This coincided with a 1.2% decrease in the Tech Index and a marginal 0.1% fall in the Shanghai Composite Index.

Additional factors that contributed to the market’s decline include a change in leadership at the Hong Kong Exchanges and Clearing (HKEX), with CEO Nicolas Aguzin resigning, and lackluster Chinese economic data. Retail sales and property investment in November underperformed economists’ projections.

Why It Matters: This move by Alibaba comes after it recently announced plans to reshape its investment strategy and capital management, leading to a reduction in its stake in Xpeng from 10.2% to 7.5%. This equates to a sale of approximately 25 million American depositary receipts, worth roughly $391 million. This adjustment aims to address Alibaba’s capital management goals, but its ripple effects have impacted the broader stock market.

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