what happened
Shares of Alibaba (NYSE: BABA) climbed 5.5% on Tuesday after reports surfaced that the founder of the Chinese e-commerce titan was not actually missing.
Approximately
After several news agencies noted that Alibaba founder Jack Ma had not been seen in public since October, when he criticized Chinese regulators for stifling innovation, speculation erupted about where he was. However, this speculation died down after CNBC reported that Ma was not missing and simply ‘lay low for the time being’. The news helped ease investors’ concerns that Chinese regulators were planning to drop Alibaba hard in retaliation for Ma’s comments.
Alibaba’s stock rose on Tuesday. Image Source: Getty Images.
Tuesday also brought news that the New York Stock Exchange no longer intends to delist three Chinese companies. The NYSE has previously deemed it necessary to do so in order to comply with an executive order issued by President Donald Trump, which sought to invest Americans in companies that allegedly support the Chinese military. Alibaba was not one of the three companies the NYSE was planning to delist, but the news helped reduce investors’ fears that US regulators would take broader action against Chinese companies.
Now what
Investing in Chinese stocks offers the potential for attractive returns, partly due to the massive size and rapid growth of the Chinese economy. Unfortunately, this also poses major risks, including the possibility of severe repression by both Chinese and US regulators. Although Alibaba seems to have avoided these troublesome short-term scenarios, investors should be aware that the regulatory risk still exists.