Alibaba fine fails to rattle markets but clears the air for investors – analysts
JOHANNESBURG - THE $2.8 billion (R41bn) antitrust fine slapped on global e-retail company Alibaba for abusing its market dominance had little impact on the markets yesterday, with experts saying that the conclusion of the antitrust investigation had cleared the spectre of uncertainty facing the internet giant.
Senior analyst at ActivTrades, Ricardo Evangelista, said yesterday that while the fine represented a large sum of money, it was smaller than many had expected, representing 4 percent of the firm’s 2019 revenue, considerably less than the maximum of 10 percent set by regulations for such violations.
On the other hand, Evangelista said, closing the chapter was seen as positive for Alibaba and cleared the spectre of uncertainty.
“For these reasons, the markets reacted positively, with shares gaining more than 6 percent after opening on Monday. Looking ahead, the outlook of the firm improved with the conclusion of the antitrust investigation, which may be the first step in the normalisation in the relationship with Beijing authorities,” said Evangelista.
On Saturday the State Administration for Market Regulation of the People’s Republic of China imposed the $2.8bn penalty. According to reports, the Administration for Market Regulation said the practice stifled competition in China’s online retail market and infringed ”on the businesses of merchants on the platforms and the legitimate rights and interests of consumers”.
Alibaba said in a statement that it accepted the penalty with sincerity and would ensure its compliance with determination.
“To serve its responsibility to society, Alibaba will operate in accordance with the law with utmost diligence, continue to strengthen its systems and build on growth through innovation,” it said.
Evangelista said: “Therefore, I would say this fine, which ended up being on the lower side of the potential range and as it marks the end of uncertainty, is good news for investors.”