- Alibaba Group Holding Limited (NYSE: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 (OTC: SSNLF) and SK Hynix to hold back from boosting sales to China if it bans Micron Technology, Inc (NASDAQ: 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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