Type to search

Foreign Money Flowing Back Into China on Alibaba, Ma Boosts

Alibaba’s shares have soared over 14% since the company’s break-up plan announcement and $1.7bn in foreign cash has flowed into China’s markets

China's bluechip CSI300 Index fell more than 2% on Thursday.
China's bluechip CSI300 Index fell more than 2% on Thursday.


Foreign money has been flowing back into China following the news of tech giant Alibaba’s plans to restructure, with investors seeing it as a sign that Beijing has turned business-friendly again.

Exchange data shows net foreign buying of mainland-listed stocks every day since Alibaba announced its intention to split up and float its business units last week, for a record quarterly total.

Investors have also turned positive on the company and the stock is up this year after heavy falls in 2021 and 2022.


Also on AF: China’s Yuan is Now the Most Traded Currency in Russia


The flow may be signalling a shift in sentiment among foreign investors who have been notably absent while China’s markets and economy roared back to life after Beijing abruptly lifted its stringent zero-Covid policy in December.

The MSCI China index gained 4.5% in March against a gain of only 2.8% for world stocks and the Shanghai Composite has just closed out its best quarter in more than two years, with a 5.9% gain.

Derrick Irwin, a portfolio manager at US asset manager Allspring Global Investments, said the Alibaba break-up and founder Jack Ma returning to China appear part of an effort by the government to extend an olive branch to entrepreneurs.

“This may reignite investment in the private sector,” he said.

China has since late 2020 waged a crackdown on a broad range of industries, leaving startups and its biggest companies alike operating in an uncertain environment. It punished tech companies for monopolistic behaviour among other issues, levying large fines on e-commerce firms including Alibaba.

Rob Brewis, a portfolio manager at UK-based asset manager Aubrey Capital Management Ltd, said the firm had moved back into Chinese equities this year, mainly based on economic recovery hopes and cheap valuations.

Aubrey also bought Alibaba earlier in the year, having not owned it for the past two years. Alibaba’s recent plans are positive, said Brewis, who planned to keep “decent exposure”.


Alibaba Units Split-Up Proposal

Alibaba’s shares are up more than 14% in the five days since the company’s announcement and some 11.7 billion yuan ($1.7 billion) in foreign cash has flowed into China’s markets.

That’s already more than the net 9.2 billion yuan in inflows in February and drove March flows to 35.4 billion yuan and the quarter’s inflow to a record of 186 billion yuan.

Alibaba’s plans, which investors think augur another era of growth and capital raising for the company are being viewed as a broad sign of a policy shift because the firm and its billionaire founder were high-profile targets during the crackdown.

The 11th-hour scuttling of Ma’s Ant Financial’s $37 billion public listing in November 2020 ushered in a period of unpredictable government and regulatory scrutiny that sent Alibaba stock down some 80% over two years to last October.

Last week’s announcement comes on top of supportive comments from the authorities. Premier Li Qiang assured foreign investors that China would unswervingly adhere to reform and opening up, expanding market access and optimising the business environment.


Business-Friendly Beijing Signs

As many as 67% of investors in the United States are now seeing the start of a trend towards more business-friendly actions from Beijing, a recent survey by BofA Securities found, according to a note seen by Reuters and a source familiar with the matter. BofA Securities declined to comment.

Ernest Yeung, a portfolio manager at US asset manager T. Rowe Price, anticipated “a gradual process of stabilisation” of private enterprises and the internet sector.

His team has been focusing on investing in “forgotten or out-of-favour” stocks, and built a position in Alibaba last year.

The lingering question is how China reconciles its commitment to business with its political ideology.

Investors will watch “whether this is like Mao’s ‘Let a hundred flowers bloom’ campaign that will just be reversed if it doesn’t serve the interests of the Party,” said Brian Jacobsen, senior investment strategist with Allspring.


  • Reuters with additional editing by Sean O’Meara


Read more:

Alibaba Shares Jump After News it Will Split Into Six Units

Jack Ma Returns to China in Sign of Easing Tech Crackdown

Record Inflows to Emerging Market Funds After China Reopening



Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


AF China Bond