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Charly Triballeau / AFP through Getty Images
Thursday’s sharp drop in Alibaba Group shares, triggered by news that China is investigating the e-commerce giant over antitrust issues, spilled over into
SoftBank Group,
holding company in Japan, Alibaba’s largest investor.
SoftBank (ticker: 9984. Japan) has a stake of 24.9%
Alibaba
(BABA) worth about $ 143 billion. This is higher than SoftBank’s current market capitalization of $ 135 billion. Thursday’s 13% decline in Alibaba shares reduced the value of the SoftBank package in the company by more than $ 22 billion.
SoftBank founder Masayoshi Son made a $ 20 million investment in his friend Jack Ma’s new e-commerce company in 2000, in what was probably the best risky investment in history.
SoftBank in 2020 was in an aggressive campaign to sell assets to raise cash to repay shares and repay debts. Since declining market sales in the spring, SoftBank shares have tripled, bringing the company’s US-listed shares to a 20-year high. SoftBank has sold a small portion of its Alibaba shares as part of its asset sale program, but continues to hold most of its position.
A SoftBank spokesman declined to comment.
Meanwhile, the market’s interpretation of how the situation could affect other China-based e-commerce pieces is definitely mixed.
JD.com
(JD), a large online retailer that initially focused on consumer electronics, says on its website that it is “the largest online retailer in China and the largest retailer in general, as well as the largest internet company in the country by revenue ”. Although you may see an Alibaba investigation as good news for JD.com, investors instead seem worried that it could face closer scrutiny. JD was down 1.1% to $ 84.49 on Thursday.
But the market is upside down
Pinduoduo
(PDD), an online retailer in China. Pinduoduo shares rose 8.9% to $ 152.75.
SoftBank shares fell 4.6% to $ 37.25 on Thursday.
Write to Eric J. Savitz at [email protected]