Alibaba Group Holding Ltd co-founders Jack Ma and Joe Tsai's recent move to buy back shares of the Chinese technology heavyweight is expected to shore up investor sentiment and market confidence toward China's tech sector, and drive up the stock prices of major Chinese internet companies, industry experts said.
Shares of Alibaba surged 7.32 percent to close at HK$72.6 ($9.28) on the Hong Kong stock exchange on Wednesday, while Baidu Inc and JD saw their share prices soar 6.7 percent and 4.69 percent, respectively.
Alibaba said late on Tuesday that Ma and Tsai have been aggressively buying the company's shares of late, signaling their confidence in its development prospects.
Tsai bought around $151 million worth of Alibaba's US-traded shares via his Blue Pool family fund in the fourth quarter of last year, according to a regulatory filing from the US Securities and Exchange Commission.
In 2023, the company said, Alibaba repurchased a total of 897.9 million ordinary shares, adding that the shares were bought on both the US and Hong Kong stock markets under its share repurchase program.
The e-commerce company emphasized that it has continued to repurchase shares for five consecutive years, demonstrating its firm confidence in its future development.
Hong Yong, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation's e-commerce research institute, said the latest share buyback will not only consolidate investor trust and support for Alibaba, but also help boost market confidence toward China's internet and tech industry.
As of Dec 31, the remaining amount the company's board had authorized for its share buyback plan, which is effective through March 2025, was $11.7 billion, according to Alibaba.
The company also said that it had 20 billion ordinary shares outstanding as of Dec 31, 2023, compared to 20.7 billion ordinary shares as of Dec 31, 2022. This indicates a net reduction of 3.3 percent in its outstanding shares in the last 12 months.
The share repurchase move came after Jiang Fang, a partner and chief talent officer of Alibaba, said on the company's internal network in November that Ma had not sold a single share of the company, and will continue to hold Alibaba shares, adding that the current stock price of Alibaba is far below its real value.
Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School, said the increased shareholdings of Ma and Tsai, who serve as key shareholders of Alibaba, show their confidence in the company's prospects, which is conducive to stabilizing the capital market and improving investor confidence.
Pan said in order to reverse the downward trend of stock prices, it is important to improve corporate profitability and optimize the business structure.
The challenge for Alibaba, he said, is how to maintain rapid growth amid an increasingly complex environment and intensified competition from domestic rivals such as PDD Holdings.
Alibaba said in 2023 that it will split its business into six main units, with each separate business having the flexibility to raise outside capital and seek its own initial public offering, the most significant organizational change to the company in its 24-year history.
However, it announced in November it will not proceed with the full spinoff of its cloud unit due to uncertainties caused by the recent expansion of US export controls on advanced computing chips.
Alibaba said its total revenue stood at 224.79 billion yuan ($31.4 billion) during the July-September period, up 9 percent year-on-year, driven chiefly by improved consumer sentiment.