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Jack Ma video only deepens the mystery

(ATF) A video has appeared with billionaire Jack Ma giving a short talk to teachers working at one of his charitable projects. As the charity usually meets at this time of year, Ma says with regret they will have to meet again after the epidemic. But no details were given about where he has been the last 88 days and this has lead to rampant speculation.

China’s most famous entrepreneur, also known as Ma Yun, said: “During this period, my colleagues and I have been studying and thinking, and we have become more determined to devote ourselves to the idea of education for public welfare.” Ma Yun Charity Foundation confirmed this to the media.

Apart from stocks rising for companies associated with the Ma, there was no more information on his circumstances. Some internet sites say he is playing golf in Sanya, others say he is attending a memorial in Hong Kong.

Alibaba stocks rose collectively on Wednesday afternoon. At the close of trading in Hong Kong on January 20, Alibaba stocks rose 8.5%, with tech giant’s market value increasing by HK$11.96 billion in the day. Ali Health also rose 17%, Ali Pictures was 3% up and Sun Art Retail increased 4%. This lifted the total market value of the four companies by nearly HK$68 billion, or about 56.6 billion yuan (US$8.7 billion). The company’s American Depositary Receipts (ADRs) rose more than 5% on Wednesday.

But the share rise has done little to resolve the Chinese e-commerce giant’s troubled relationship with regulators and that is making some investors hesitate about owning its stock.

Other facts on hand don’t offer a great deal; Jack Ma’s last update on Weibo was on October 17 last year. The speech released on January 20 was made by Ma for the 2020 China Basic Education Innovation Development Forum.

On October 24, Jack Ma “spoke wildly” in the Bund Financial Summit in Shanghai. Less than 10 days later, financial regulators and financial system media outlets criticized Ma Yun’s Ant Group. This was followed by “interviews” with the group, “new regulations”, and the suspension of Ant’s massive IPO. Hundreds of billions drained from Alibaba-related stock.

At the end of last week, regulatory authorities said that commercial banks are no longer allowed to carry out fixed deposit and fixed-activation deposit business that comes from online platforms outside than their own, such as Alipay and WePay.

In other words, online platforms such as Alipay are no longer allowed to promote deposit business. And now, all deposit and wealth management products have disappeared from the Alipay app, stopping Ant’s business in that area.

According to media reports, the Ant placement fund has shrunk by one-third, and nearly 2.6 million households have dropped out, and there is still no clear timeline for for the IPO.

One source familiar with the situation told Reuters Jack Ma cleared his schedule late last year to keep a low profile. That prompted discussion at Alibaba about when and how he should reappear to assure investors. It was decided he should do something that would appear as part of his normal routine, rather than anything overt that could irk the government.

While Ma stepped down from corporate positions in 2019 and earnings calls, he retains significant influence over Alibaba and Ant.

Some guessed that Ma Yun’s appearance meant that “the punishment on Alibaba Group has been implemented, so Ma Yun can finally show up.”

Doubts that all is well

But despite the stock gain on Wednesday, there is scepticism that all is well.

“What his actual state is will be completely up to Beijing to reveal to us,” Leland Miller, CEO of US-based consultancy China Beige Book, said. “What we do know is – whether Jack is running around, Jack is hiding or something else – Alibaba is not in the clear. There is a lot more of the story still to see.”

And while the surge in the company’s stock made headlines, the judgment of industry insiders is not optimistic, according to AI Finance.

Li Chengdong, an e-commerce analyst, believes: “Ma Yun’s appearance is a signal that Ant Financial’s crisis is lifted, but Ali’s antitrust crisis has not been lifted.”

Recently, Alibaba’s statement on anti-monopoly “rectification” shows that Tmall will be pulled over the coals this year. Li Chengdong believes that this will not affect Ali’s performance immediately, but it will have a great long-term impact. “It is not looking so optimistic for Tmall. It is still more difficult for (the Alibaba share price) to return to historical highs.”

Cui Lili, director of the Electronic Commerce Research Institute at Shanghai University of Finance and Economics, told AI Finance Ma Yun’s appearance had temporarily eased speculation, which stems from the current regulatory clampdown. “But according to relevant information, in the short term. China’s policy environment will not undergo much adjustment, which means that most Internet companies have to adapt their past strategies and practices, and it is difficult to say that they will return to the track of the past.”

For Cao Lei, director of the e-commerce research center at Net Economics, the situation is not optimistic. “Ma Yun’s appearance can only say that Ma Yun is OK at the moment. It does not mean that it is OK in the future, nor does it mean that the company is OK. Ali is still under investigation for suspected antitrust violations. Ant Financial is also ‘rectifying.’ The soft landing is still in a state of suspension.”

Foreign investors who sold out or reduced positions in Alibaba say they need more reassurance about the company and the regulatory environment before reconsidering the stock.

At the anti-monopoly level, the overall environment Alibaba faces is still tightening. Notice of an investigation into Alibaba was filed on December 24. Four days later, the media revealed that Meituan had entered an anti-monopoly lawsuit against Alibaba. The Beijing Intellectual Property Court has filed the case for trial. 

Most recently, on January 14 this year, Vipshop also faced a probe by the State Administration of Market Supervision on suspicion of having an unfair competition policy.

So, Alibaba and the 40 ‘thieves’ may have to retreat to their cave once again. It is not yet time to say “Open sesame.”


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Chris Gill

With over 30 years reporting on China, Gill offers a daily digest of what is happening in the PRC.


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