On Tuesday morning, Chinese state TV, CCTV, reported that police in Hangzhou have apprehended an individual whose name is Ma. According to the report, the police have taken ‘compulsory measure’ against Ma on April 25, on charges bordering on using the internet to engage in activities endangering national security.
Upon the news, Alibaba’s shares nosedived by as much as 9.4%, erasing about $26 billion in value. Investors dumped their shares, believing the arrested person is Jack Ma, the founder of Alibaba, according to Fortune.
Hangzhou is Jack Ma’s home city. The broadcaster, who did not give details of the arrest earlier said that the surname of the arrested individual has only two characters, but later revised the report to suit a clarification issued by Hangzhou’s police that the individual’s full name has three characters, according Fortune.
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The clarification, which explained that the arrested individual is a hardware research director at a Chinese tech company, came a little late. The full name of Jack Ma, whose given name is Yun, has two characters and makes a distinctive difference between him and the individual in question. Per Fortune, by noon Hong Kong time, Alibaba shares had pared losses to just 1.8%.
‘Ma, which literally means “horse,” is the 13th most common surname in China, according to a 2019 report by China’s Ministry of Public Security. Hangzhou’s population of 12 million likely includes more than 100,000 people surnamed Ma.’
But as noted by Fortune, the development points to the fact that investors are still wary of Alibaba’s stock. Alibaba became a target of Chinese authorities in 2020, after Ma publicly criticized the country’s policymakers for making what he considered backward rules that don’t support economic growth.
Ma’s criticism triggered what would later spiral into a major crackdown on the Chinese tech industry, wiping billions of dollars off the markets. In 2021, Beijing imposed regulations and fines on some of the country’s largest tech companies based on issues such as national security, misuse of private data and monopolistic practices. The affected sectors include gaming, ride-hailing, edtech, and food delivery. The crackdown spooked a lot of investors who are yet not convinced that the coast is all clear in the industry. The Hang Seng Tech Index was down 57% from its February 2021 peak.
Alibaba was fined a record $2.8 billion for anti-competition practices in April 2021. Ma has largely disappeared from public views, appearing only about twice since then.
Alibaba has lost 66% of its value since 2020, following the Chinese government’s decision to halt the IPO of its fintech subsidiary – Ant Group, which would have been the largest in history at $34 billion.
Though the Chinese authorities seem to be sheathing their sword as the world’s second largest economy record massive drop in economic growth, investors in Ma’s conglomerate are still concerned that the billionaire and the entire tech industry are not totally off the hook of the authorities, and the crackdown may be revitalized whenever they deem fit.
Fortune reported that longtime Alibaba investors, like Charlie Munger’s Daily Journal Corp, are even trimming their holdings of Alibaba shares.