. Alibaba Group Restructuring Sends Hang Seng Soaring - 08 May

Alibaba Group Restructuring Sends Hang Seng Soaring – 08 May

Alibaba Group Restructuring Sends Hang Seng Soaring – 08 May

08 May 2023

Asian markets rally as concerns over banking crisis recede, Alibaba’s restructuring propels Hang Seng.

Jakarta Stock Exchange Composite (JKSE) slumped 0.27% today.
On Wednesday, most Asian stock markets saw gains as regulators further downplayed fears of a banking crisis. Hong Kong’s Hang Seng index rose sharply as investors cheered a major restructuring in e-commerce giant Alibaba Group. The Hang Seng jumped 2.2% to an over three-week high, with Alibaba Group Holdings Ltd up nearly 15% in early trade. The e-commerce firm said it plans to split its business into six separate units, each with its own leadership and scope for public listing.

The move was seen as overly positive by investors, in hopes that it could attract lesser regulatory scrutiny, and also generate more future returns given that the six units represent Alibaba’s largest moneymakers.

Other technology stocks on Hang Seng were also caught up in the buying, with Tencent Holdings Ltd and Baidu Inc up over 2% each.

Japan’s Nikkei 225 index rose 0.4%, aided by an over 5% jump in investment house SoftBank Group Corp., which owns a 13.5% stake in Alibaba.

Broader Asian stocks also advanced, as overnight comments from U.S. regulators reiterated strength in the banking system, and blamed the recent collapse of Silicon Valley Bank on mismanagement, rather than systemic risks.

  • The comments, coupled with a lack of negative news from the banking sector over the past two weeks, helped ease concerns over an imminent collapse in U.S. banks. This saw investors cautiously buy into risk-heavy Asian markets.
  • But gains were limited by an overnight bounce in U.S. Treasury yields, as easing banking fears saw markets pricing in the potential for more policy tightening by the Federal Reserve.
  • Indonesian stocks led gains across Southeast Asia with a 0.8% bounce, while Australia’s ASX 200 added 0.2% after softer-than-expected inflation data furthered the case for a pause in the Reserve Bank’s rate hike cycle.
  • But Chinese stocks lagged their Asian peers, with the Shanghai Shenzhen CSI 300 index up 0.2%, while the Shanghai Composite fell 0.1%. Mixed economic readings from the country saw investors scale back their bets on a Chinese rebound this year, even as the country ended three years of anti-COVID lockdowns.
  • China’s massive export sector is grappling with weak overseas demand, while local manufacturers are also still running well below capacity.
  • Focus this week is on Chinese business activity data due on Friday. Analysts are expecting some softening in March from the prior month, as a post-COVID economic boom runs out of steam.
  • The Hong Kong stock market saw significant gains as investors reacted positively to the news of Alibaba’s restructuring. The company announced that it plans to split its business into six separate units, each with its own leadership and scope for public listing. This move was seen as overly positive by investors, who hope that it could attract lesser regulatory scrutiny and generate more future returns.
  • Other technology stocks on the Hang Seng also saw gains, with Tencent Holdings Ltd and Baidu Inc up over 2% each. The Nikkei 225 index also saw gains, aided by an over 5% jump in investment house SoftBank Group Corp., which owns a 13.5% stake in Alibaba.
  • Despite the gains seen in Asian markets, investors remain cautious, with gains limited by an overnight bounce in U.S. Treasury yields. Easing banking fears saw market pricing in the potential for more policy tightening by the Federal Reserve, which has also limited gains.
  • While Indonesian stocks led gains across Southeast Asia with a 0.8% bounce, Chinese stocks lagged their Asian