Reason for Alibaba Stock to Drop 11% in September.

    Reason for Alibaba Stock to Drop 11% in September.   The biggest reason fall of stocks is that Evergrande's troubles and regulatory threats continue in China.

What happened

Alibaba 9988 (HKG) HK$147,30 +10,00 (+%7,28) stock continued to soar in September as investors reacted to rising challenges from regulators. Concerns about the default on Chinese real estate giant Evergrande  3333 (HKG) HK$2,95 0,00 (%0,00) also frightened Chinese stocks. As a result of all this, it can be seen that Alibaba stock closed the month down 11% and fell steadily for most of the month.

So what

With the publication of the Evergrande news, Alibaba stocks fell, as well as other Chinese stocks. On September 13, the Financial Times revealed that Chinese regulators are trying to break up Alipay, payments app Ant Group, in which Alibaba owns a 33% stake. The following week, the company at Mango Excellent Media (a state-owned publisher) said it would sell its 5% stake in the company due to regulatory pressure to divest from most of its media holdings.

Reason for Alibaba Stock to Drop 11% in September.

Towards the end of the month, Alibaba added Tencent's WeChat Pay to some of its consumer apps to respond to Beijing's call for help. During this time, some analysts lowered their prices on Alibaba in response to the worsening regulatory environment.

Now what

October is also not looking better for Alibaba so far. Because the stock fell 5% in only the first two sessions of the month. In fact, Alibaba is facing a wide variety of headwinds, including the potential Evergrande collapse, its wider impact on the Chinese economy, and slower growth in its own business and regulatory front. While the Stock looked like a bargain last year, that could change this year. First, it will be necessary to wait for the perception of the investment climate in China to improve.  

Source: The Motley Fool

 

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