Chinese officials, led by President Xi Jinping, announced a revival of the Chinese economy this spring. The aim is to repair the damage caused by years of “zero corona” policies and tightening regulations, but it seems that the withdrawal of funds generated by one of the world’s largest investors is unstoppable.
Two pioneering Chinese private sector investors have signaled in recent days that they will continue to pull back from large investments in the country. Dutch internet company Prosus has registered more than $4 billion in stake in Chinese gaming and social media giant Tencent Holdings for a possible sale in Hong Kong. The Financial Times (FT) reported that SoftBank Group is moving to sell almost all of its stake in China’s largest e-commerce giant Alibaba Group, which it has invested in.
Softbank G moves to sell almost all remaining stake in Alibaba – report (3)
Prosus and SoftBank both announced comprehensive plans last year and are acting in part for reasons other than the China outlook. But it dampens investor optimism about Beijing’s recent promises to welcome foreign capital and ease its stranglehold on the tech sector.
“SoftBank’s reported plan to reduce its exposure to Alibaba could signal a growing loss of foreign investor confidence in Chinese tech companies,” said Junron Yip, market strategist at IG Asia. There is a risk that there will be growing concerns that more moves will follow suit.”
Tencent’s shares plunged to their biggest drop in nearly two months in Hong Kong on Thursday, while Alibaba lost up to $13 billion in market capitalization on Thursday.
Meanwhile, in the New York market, both companies’ American Depositary Receipts (ADRs) rose. Morgan Stanley analyst Gary Wu wrote in a note Wednesday that he did not believe SoftBank’s sale of its stake would have a “significant impact” on Alibaba’s financials or operations.
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Original title:Xi Pivot Fails to Stop Exodus by Big Investors in China Tech (1)(excerpt)