Mon. Dec 6th, 2021

The declining fortune of the e-commerce giant comes as Beijing holds the power of big technology companies in check.

Alibaba Group Holding Ltd. ‘s October rally gave way to a renewed slump that sent the stock to a record low while technology rival JD.com Inc. his recovery expands and wins favor with analysts.

Deutsche Bank AG’s Leo Chiang on Monday lowered its target price for Alibaba’s Hong Kong share by almost 4%, citing “near-term challenges”, while increasing its target for JD.com by 16%, and resilient growth in the midst of macro-uncertainties ”.

Chelsey Tam from Morningstar Inc. reflected similar views in a November 19 note, arguing that “Alibaba’s challenges go beyond the economic cycle” and that JD.com “provides more clarity on the long-term margin improvement.”

Alibaba shares fell 3% to HK $ 132.90 in Hong Kong at 11:06 a.m. on Tuesday, bringing their fall to 18% this month and more than wiped out any October gains. While JD.com was also lower on the day, in line with the broader market, it is about 46% higher from its low in August.

Beijing’s technological downturn means Alibaba will have to shift about 5% of its e-commerce revenue to its competitors, including JD.com and Pinduoduo Inc., says Ramiz Chelat, a senior portfolio manager at Vontobel Asset Management.

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