Alibaba Group’s (9988.HK) Hong Kong shares slumped 10% on Friday after it scrapped plans to spin off its cloud business, citing uncertainties fuelled by U.S. curbs on exports to China of semiconductors used in artificial intelligence applications.
The drop, potentially its biggest one-day fall in more than a year, wiped about $20 billion off the Chinese tech giant’s market value.
It was the first market reaction in Asia since the stunning strategy reversal was announced late on Thursday. The company’s U.S. listed securities closed down 9%.
“The cancellation of a full spin-off of AliCloud is a negative surprise,” said Nomura analyst Shi Jialong in a note.
Alibaba’s concerns over the U.S. export curbs announced by Washington in October come on the heels of similar worries raised this week by Chinese social media and gaming company Tencent Holdings (0700.HK) which said the restrictions would force it to seek domestically produced alternatives.
Alibaba, once Asia’s most valuable stock, was worth around $830 billion at its peak in October 2020 but is now valued at less than one fourth, as the e-commerce company took centre-stage in Beijing’s technology sector crackdown and as the Chinese economy slowed.
The latest Alibaba news underscores broader hurdles facing China’s tech companies, with the export curbs making it harder for them to get crucial chip supplies from U.S. companies.