The splitting of Alibaba Group has been seen as a sign of Beijing’s crackdown on fintech since 2020 is nearing its end.
The share price of Hong Kong’s listed Alibaba Group Holding Ltd rose 12% on Wednesday in response to the report, while an ADR Alibaba Group Holding Ltd listed in the New York Stock Exchange increased 14%.
Meanwhile, shares of JD.com Inc and Tencent Holdings Ltd. also reacted positively at the open on Wednesday, but lost their gains during the day and closed near 2%.
Alibaba said on Tuesday that the group is planning to split into six units, most of them will explore fundraisings or listings in the exchange. This is the biggest restructuring of the group in its 24-year history.
The six units that Alibaba plans to split into comprises of; Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group and Digital Media and Entertainment Group.
The split shed some light for many investors that were weary with strict regulations that once derailed Jack Ma’s $37 billion IPO just days before its launch.
Jon Withaar, head of Asia special situations at Pictet Asset Management believed that this is likely a sign that we are moving closer to the end of the regulatory scrutiny on BABA (NYSE listed Alibaba).
The shift in Alibaba comes as Chinese policymakers are expected to turn their focus to boosting economic growth in 2023, and tech firms will be key drivers to achieve that target.
Most economists expected growth in China to be sluggish in the first quarter as domestic demand remains weak, but will bounce back in the second quarter.