Company will face investors as Beijing corporate crackdown intensifies – .

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Company will face investors as Beijing corporate crackdown intensifies – .



The company will release results for its last quarter on Tuesday.

Alibaba’s core business – e-commerce – has held up well during the coronavirus pandemic, soaring as people turn to online shopping to buy things without leaving their homes. The company has also benefited from continued economic strength in China, which avoided the recession that hit most of the world last year.

The company is expected to report revenue of 209 billion yuan ($ 32 billion) for the quarter, a 36 percent increase from the previous year, according to data provider Refinitiv.

But the prospect of further scrutiny from Chinese regulators looms on the horizon.

In May, Alibaba (BABA) Said it recorded a loss of around $ 1.2 billion in its first quarter – a success mainly due to a record $ 2.8 billion fine that Beijing imposed on the company after accusing it of behaving like a monopoly.

Joe Tsai, co-founder and executive vice president of Alibaba Group, played down concerns when announcing the fine, saying the company was “satisfied” that it was able to “put this case behind us.”

“With this sanction decision, we received good advice on some of the specific issues under the anti-competitive law,” he told investors on a call at the time.

Beijing’s broader crackdown has not stopped. New York-listed Alibaba shares plunged nearly 14% in July as investors grew nervous about Chinese technology, including the ability of these companies to trade outside of China. (Alibaba is also trading in Hong Kong; its dual listing in 2019 has been touted as a symbolic homecoming for the company.)

Shortly after ridesharing giant Didi went public on the New York Stock Exchange in late June, Beijing banned it from app stores over cybersecurity reasons. The stock has plunged and is still trading well below its IPO price of $ 14 per share.

U.S. securities regulators have also expressed concern about future Chinese public offerings, with the Securities and Exchange Commission asking staff last week to ask those companies to release more information before trading plans can be made. be approved.

Beijing calls for calm after historic tech stock rout

The regulatory scrutiny of a growing number of industries has also scared off investors. A market sell-off last week wiped out hundreds of billions of dollars in market value for several leading Chinese tech companies, including Alibaba. It happened when Beijing released guidelines for education technology, food delivery, and other sectors.

Chinese state media have since urged investors to remain calm, with one newspaper telling them to “have confidence in the market.”

“A short-term shock does not change the nature of the positive long-term trend,” read a commentary in the Securities Times last week. “China’s economy and markets are advantaged in breadth and depth. “

– Paul R. La Monica, Laura He and Michelle Toh contributed to this report.

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