Internet giant loses $38b over arrest rumour

A single nasty rumour about Chinese billionaire Jack Ma ended up costing his online retail juggernaut Alibaba billions of dollars.

Alibaba co-founder Jack Ma’s rumoured arrest – which later turned out to be false – sent shares of the company falling by as much as 10 per cent within minutes on Tuesday morning and cost the firm $A28 billion in value.

Mr Ma has scarcely been seen in public since the Chinese government launched a crackdown on big businesses in late 2020, the New York Post reports.

On Tuesday, Chinese state-run media reported that a man with the same name as Ma’s, which is a very common name in China, was arrested by authorities for alleged national security violations.

The arrest took place in the Chinese city of Hangzhou, which is where the e-commerce company is based.

News of the arrest of “Ma” rattled the markets as investors started selling off Alibaba stock. The company’s share price dipped 9.4 per cent in early trading in Hong Kong on Tuesday, according to Bloomberg News.

But state-run media issued a clarification, noting that the person in question was not the Alibaba co-founder.

The arrested individual, who was identified as an employee of a local IT company, was born in 1985, which makes him at least 20 years younger than the billionaire Alibaba boss.

After the clarification, Alibaba’s shares recovered most of their losses.

Mr Ma has been largely absent from the public stage since November 2020, when he was taken for questioning by regulators for criticising China’s state-owned banks.

A scheduled IPO of his other company, Ant Group, was shelved as a result.

It coincided with Beijing’s antitrust crackdown on large tech firms which until then had been allowed to operate relatively freely.

The government moved against tech unicorns like Alibaba, Tencent, Meituan and Didi.

Alibaba was fined a record $A3.7 billion in April last year over monopoly violations.

Mr Ma, a former English teacher, disappeared from public view for three months before surfacing in January 2021, speaking to a group of teachers by video.

That eased concern about his unusual absence from the limelight and sent Alibaba shares surging.

This article originally appeared in the New York Post and has been reproduced with permission

Read related topics:China


be the first to comment on this article

Leave a Reply

Your email address will not be published.

Take Me Top