By Justina Lee
Shares of Alibaba Group Holding Ltd. are leading tech shares higher in Hong Kong, tracking gains in the company's US-listed ADRs following a business reorganization as well as fresh moves by Beijing to stimulate China's slowing economy.
Alibaba's shares were up 10% at HK$124.20 on Tuesday afternoon. The company is on pace for its biggest one-day gain in more than a year, albeit still down 47% in the year to date.
The broader Hong Kong Hang Seng Tech Index, down almost 31% this year, was up 2.8% amid a broadly risk-on day for stocks. Sentiment is higher partly due to plans China's central bank announced Monday to reduce reserve requirements for banks, allowing them to inject more liquidity into the country's financial system.
The rise also comes after Alibaba said Monday that it would combine its Chinese e-commerce units into one and that it would create a new international digital-commerce team to help the company "become more agile." The Hangzhou-based company also said its chief financial officer would step down from that position in April.
Citi said in a research note that combining leadership of marketplaces, offline retail and wholesale "could speed up unified, seamless strategic decisions and all marketplaces could work closer together to serve changing domestic consumer spending behaviors." Changes to international business suggest Alibaba "might step up its content-personalization approach" and replicate successful features of its Taobao ecosystem to other platforms, it said.
Citi reiterated a buy rating on Alibaba's US-listed ADRs and a price target of US$234, saying the mark is justified by Alibaba's "dominant position in e-commerce." ADRs closed 10% higher Monday at US$123.60
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(END) Dow Jones Newswires