Alibaba surges 10% as investors hope for easing of tensions with Biden and Xi set to meet

biden xi jinping china
Chinese President Xi Jinping with then-US Vice President Joe Biden in Beijing in 2013.

  • Alibaba stock jumped 10% as US President Biden and his Chinese counterpart are headed for a virtual meeting this year
  • The talks could lead to an easing in political tensions between the economic powerhouses.
  • Alibaba stock this year has suffered from Beijing’s regulatory crackdown on businesses.

Alibaba stock leapt nearly 10% on Thursday following news that US President Joe Biden and Chinese counterpart Xi Jinping will meet later this year, stoking anticipation they will be able to lessen tensions between the world’s largest economies.

Shares of the Chinese e-commerce behemoth climbed as much as 9.8% to $158.29 before paring the rise to 8.5%. The push brought the price to its strongest level since mid-September.

Alibaba stock also was catching the eye of retail investors, with Swaggy Stocks showing it running second in ticket sentiment on Reddit’s WallStreetBets forum.

The US and China agreed in principle for Biden and Xi to hold a virtual meeting before 2021 ends, Reuters reported Wednesday, citing a senior US administration official. Earlier on Wednesday, US national security adviser Jake Sullivan and Yang Jiechi, China’s top diplomat, met face-to-face for the first time since an unusually public airing of grievances in March, the report said.

Since Biden has taken office, he has maintained key components of tough China trade policies that began under the Trump administration. On Monday, U.S. Trade Representative Katherine Tai said the White House wants to restart trade talks with China but will keep steep tariffs in place for now.

Other issues have also strained US-China ties lately, including Beijing’s threats against Taiwan, its claims in the South China Sea, and the treatment of ethnic Uighur minorities.

“Investors should understand that the United States and China getting along and working together is good for equity markets around the globe,” said Naeem Aslam, chief market analyst at AvaTrade, in a note.

Meanwhile, Alibaba and other US-listed Chinese stocks have also been dragged lower during the year with Beijing ramping up a regulatory crackdown on a wide range of companies in a campaign to reform various business and social practices. Securities and Exchange Commissioner Gary Gensler last month said he doesn’t believe China-related companies are providing adequate information about the risks they and, in turn, American investors, face.

China’s regulatory crackdown has accelerated since late 2020, when Alibaba founder Jack Ma made comments critical of some Chinese institutions. His financial services platform Ant Group later withdrew an IPO in Shanghai and Hong Kong under pressure from the government.

Alibaba stock this week also appeared to find support from news that Charlie Munger – best known as Warren Buffett’s business partner and Berkshire Hathaway’s vice-chairman – has doubled down on his bet on Alibaba. Munger’s publishing company Daily Journal increased its stake last quarter to 83%.

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Charlie Munger’s Daily Journal swooped on Alibaba’s tumbling stock last quarter, boosting its stake by 83%

BERKSHIRE BUFFETT MUNGER 2021
Warren Buffett and Charlie Munger.

  • Charlie Munger’s Daily Journal increased its Alibaba stake by 83% last quarter.
  • Warren Buffett’s business partner first invested in the Chinese e-commerce group earlier this year.
  • Alibaba’s US-listed shares have tumbled nearly 40% this year due to mounting regulatory threats.
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Warren Buffett advises investors to “be greedy when others are fearful.” Charlie Munger showcased that approach last quarter by doubling down on Alibaba stock while other shareholders rushed for the exit.

Munger is best known as Buffett’s business partner and Berkshire Hathaway’s vice-chairman. However, the 97-year-old has also been Daily Journal’s chairman since 1977, and manages the newspaper publisher and legal-software provider’s investment portfolio.

Daily Journal boosted its Alibaba stake by 83% to more than 300,000 shares in the third quarter, Securities and Exchange Commission filings show. It established a position in the Chinese e-commerce group in the first quarter of this year, marking the only addition to its US stock portfolio since at least the end of 2013, when it began disclosing its holdings.

Munger plowed $40 million into Alibaba in the first quarter of this year, and probably invested another $25 million or so last quarter, based on the stock’s average closing price in the period. However, Alibaba’s US-listed shares have plunged almost 40% this year due to the Chinese government’s crackdown on technology companies, meaning Daily Journal’s enlarged stake was worth only $45 million at the end of September.

Daily Journal owned only nine stocks, worth a combined $350 million with a $80 million cost base, as of June 30 this year. It held four of those – Bank of America, Wells Fargo, US Bancorp, and South Korean steelmaker Posco – along with one other foreign stock and a sixth company’s bonds at the end of 2013, valuing its portfolio at $151 million at the time.

Munger has mostly invested in American companies such as Coca-Cola and Costco throughout his career, making his wager on Alibaba somewhat surprising. However, he did bring BYD to Buffett’s attention, which led to Berkshire plowing about $230 million into the Chinese electric-vehicle company in 2008. The conglomerate’s stake has skyrocketed 30-fold in value to about $7 billion since then.

Read more: Here are 6 reasons to go ‘all in’ on financial stocks right now, according to Jefferies – and 11 names to buy to capitalize on gains ahead

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The Evergrande crisis and Beijing’s tech crackdown have rattled investor confidence in China, but 2 experts say they’re still bullish on the world’s 2nd-largest economy

A logo of Ant Group is seen at the company's headquarters on October 30, 2020 in Hangzhou, Zhejiang Province of China.
Ant Group headquarters, October 30, 2020 in Hangzhou.

  • The Evergrande crisis and Beijing’s ongoing tech crackdown have rattled investor confidence in China.
  • Yet, two experts said they’re still bullish on the country.
  • “I believe very strongly that Chinese tech will weather the current rough storms,” Fred Hu of Primavera Capital said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The Evergrande crisis that’s roiling global markets and Beijing’s ongoing tech-sector crackdown have rattled investor confidence in China. Yet two experts speaking on a podcast hosted by Goldman Sachs said they’re still bullish on the world’s second-largest economy.

Among the big questions is whether China is still investable, which Fred Hu, founder and CEO of Primavera Capital and former partner at Goldman Sachs, answered: yes.

“There are clearly some legitimate concerns in the short term because there’s a lack of communication, lack of clarity of the government … So, I do understand why some investors may be frightened,” he said on the podcast published Tuesday. “But I believe very strongly that Chinese tech will weather the current rough storms… I think it would be a mistake to ignore the opportunities in China tech.”

Hu said he understands the rationale of China in stepping up its regulatory policies against tech companies, given that the Asian nation has one of the world’s most robust and influential tech sectors.

“The tech sector has played a massively beneficial impact … throughout the pandemic,” he said. “Nevertheless, the ubiquity and the growing role of tech companies has clearly also caused a variety of concerns in China as elsewhere.”

He enumerated three of the most common concerns when it comes to China’s rapidly expanding tech industry: abuse of market power, data security, and consumer privacy.

The current wave of regulation affects the consumer internet sector the most, he said, which includes fintech, e-commerce, and education-tech. But semiconductors, industrial automation, robotics, cleantech, electric vehicles, and renewable energies, he said, have been largely spared from the crackdown.

“Tightening of regulations unties monopolies,” he said. “Those are going to happen regardless, in China and elsewhere. It doesn’t mean it’s the end of tech investment opportunities in that. Far from it.”

David Li, an economics professor at Tsinghua University, agreed, saying he would have concentrated his investments on the tech sector if he was 30 years younger. He also gave investors a word of advice.

“I wouldn’t try to make comments on areas like politics or international relations,” Li told the podcast. “I think this is a new era of China … Business is business. Politics is politics. Don’t mix them.”

China in August issued a five-year blueprint that indicated it won’t be loosening its grip on the tech sector anytime soon. Authorities said they would actively work on legislation for national security, tech innovation, monopolies, and education, signaling a continuation of the nation’s data privacy and antitrust issues.

This has led some, such as George Magnus, an associate at Oxford University’s China Center, to warn about the risks in investing in the Asian economy.

“China is not your run-of-the-mill investment universe for reasons that we’ve been talking about, which is intervention of politics in the extreme,” he said on the podcast. “I think it’s a much riskier and a much more dangerous market than what it was six months ago.”

Magnus highlighted the last-minute cancellation of the $37 billion IPO of Alibaba’s Ant Financial as well as the clampdown on ride-hailing giant Didi after its successful New York debut as examples.

Ant on Wednesday said it will integrate its data into a government credit-reporting system, according to its account on social media platform Weibo.

“There’s a big picture here which is really about the supremacy and the controlling influence of the president within the party,” Magnus said, referring to President Xi Jinping’s tight leash on the sector.

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From Tesla to Netflix: These are the companies that look set to join the ‘$1 trillion club’ in the next 5 years

Tesla CEO Elon Musk
Tesla CEO Elon Musk.

  • Tencent, Netflix, Berkshire Hathaway, and Visa are among companies headed towards the trillion-dollar stock market valuation, a study shows.
  • The study compared the market cap of the 50 biggest public companies along with their average annual growth.
  • Estimates for Chinese firms do not factor in Beijing’s most recent regulatory crackdowns.
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Tesla, Netflix, and Warren Buffett’s Berkshire Hathaway are among 16 companies in the race to hit the $1 trillion mark within the next five years, according to a recent study by cloud-based procurement solutions provider Approve.com.

Facebook became the fifth US company to join the $1 trillion club in late June this year, joining other tech leaders such as Apple, Microsoft, Amazon, and Google parent Alphabet to achieve that milestone. Oil producer Saudi Aramco is the only non-US company in the exclusive club.

Approve.com analyzed the market caps of the 50 biggest publicly-listed companies alongside their average annual growth to find which ones could hit the 13-digit mark the quickest. The analysis, published in July, showed that even more tech companies are set to dominate the trillion-dollar zone.

Projections made for Chinese-based companies in this study are based on annual growth rates, and don’t include the impact of the recent regulatory crackdowns. These companies have had a turbulent year, ever since Beijing began to tighten its grip on services that were abruptly presented with new compliance challenges.

Here are the 16 companies on track to reach a $1 trillion-dollar valuation by 2026:

1. Tesla

Tesla Roadster.

Market Cap: $754 billion
Sector: Automotive (US)
Estimated year to hit $1 trillion: 2022
Average annual growth rate: 123.87%

2. Tencent

Tencent

Market Cap: $569 billion
Sector: Technology (China)
Estimated year to hit $1 trillion: 2022
Average annual growth rate: 97.04%

3. Comcast

comcast building

Market Cap: $263 billion
Sector: Telecommunications (US)
Estimated year to hit $1 trillion: 2023
Average annual growth rate: 186.93%

 

4. Meituan

Visitors look at a Meituan Autonomous Delivery (MAD) vehicle of Chinese food delivery platform Meituan-Dianping, at the first Smart China Expo in Chongqing, China August 23, 2018. Picture taken August 23, 2018. REUTERS/Stringer

Market Cap: $179 billion
Sector: E-commerce (China)
Estimated year to hit $1 trillion: 2023
Average annual growth rate: 115.74%

5. Nvidia

nvidia employees

Market Cap: $555 billion
Sector: Technology (US)
Estimated year to hit $1 trillion: 2024
Average annual growth rate: 48.27%

6. Kweichow Moutai

A rare collection of Kweichow Moutai baijiu that features sunflower logos instead of the usual flying fairy.

Market Cap: $317 billion
Sector: Alcohol (China)
Estimated year to hit $1 trillion: 2024
Average annual growth rate: 48.6%

7. Netflix

netflix

Market Cap: $257 billion
Sector: Entertainment (US)
Estimated year to hit $1 trillion: 2024
Average annual growth rate: 74.16%

8. Alibaba Group

jack ma
Jack Ma.

Market Cap: $433 billion
Sector: Technology (China)
Estimated year to hit $1 trillion: 2025
Average annual growth rate: 19.16%

9. Taiwan Semiconductor Manufacturing Company

A logo of Taiwan Semiconductor Manufacturing Co (TSMC) is seen at its headquarters in Hsinchu, Taiwan October 5, 2017. REUTERS/Eason Lam

Market Cap: $620 billion
Sector: Semiconductors (Taiwan)
Estimated year to hit $1 trillion: 2025
Average annual growth rate: 16.05%

10. Visa

AP21064764810888

Market Cap: $492 billion
Sector: Financial Services
Estimated year to hit $1 trillion: 2025
Average annual growth rate: 22.32%

11. Mastercard

Mastercard

Market Cap: $342 billion
Sector: Financial Services (US)
Estimated year to hit $1 trillion: 2025
Average annual growth rate: 32.15%

12. PayPal

GettyImages 1232621646

Market Cap: $332 billion
Sector: Financial Services (US)
Estimated year to hit $1 trillion: 2025
Average annual growth rate: 43.71%

13. Berkshire Hathaway

Warren Buffett

Market Cap: $635 billion
Sector: Investment (US)
Estimated year to hit $1 trillion: 2026
Average annual growth rate: 10.49%

14. Samsung

Samsung Galaxy Fold Z 2 5G

Market Cap: $444 billion
Sector: Technology (South Korea)
Estimated year to hit $1 trillion: 2026
Average annual growth rate: 19.24%

15. LVMH

LVMH

Market Cap: $372 billion
Sector: Luxury Goods (France)
Estimated year to hit $1 trillion: 2026
Average annual growth rate: 22.78%

16. Salesforce

Salesforce San Francisco

Market Cap: $250 billion
Sector: Software (US)
Estimated year to hit $1 trillion: 2026
Average annual growth rate: 40.67%

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3 reasons to stick with Chinese stocks even as they are battered by regulation, according to Allianz

alibaba jack ma NYSE
Jack Ma oversaw Alibaba’s debut on the NYSE in 2014.

  • Allianz Global Investors still sees a long-term case for investors to stay with Chinese stocks despite China’s regulatory crackdown.
  • The firm made a case to stay invested in China, including attractive returns and diversification opportunities.
  • Alibaba and Tencent shares have been hurt by Beijing’s swift regulatory changes.
  • See more stories on Insider’s business page.

China’s crackdown on companies ranging from technology makers to video game publishers has led to losses of billions of dollars in Chinese stocks in recent months, but there are still reasons for investors to stick with the stock market of the world’s second-largest economy, according to Allianz.

Shares of e-commerce heavyweight Alibaba, tech and entertainment conglomerate Tencent and New Oriental Education, and others been have knocked down this year as Beijing regulators impose restrictions and rule changes that hit the way the companies conduct business. The Chinese government is on a campaign to reform a wide range of business and social practices including limiting the amount of time kids can play video games each week.

The regulatory crackdown has ramped up since late 2020 after Alibaba’s Jack Ma made comments critical of some Chinese institutions, leading to the withdrawal by his Ant Group’s IPO. This week, billionaire investor George Soros criticized BlackRock, the world’s biggest asset manager, for pushing heavily into China.

“Although recent news out of China has understandably unsettled the markets, we don’t think it changes the long-term investment case. Volatility goes hand in hand with China’s higher long-term return potential,” said Allianz Global Investors in a commentary piece published this week. “Understanding the dynamics at play can help make these changes easier to take in stride.”

Here is Allianz’s case for staying invested in Chinese stocks even in the face of regulatory headwinds.

1. China equities have always exhibited higher volatility – and outsized returns

Allianz said Beijing’s regulatory crackdown highlights the different risks and greater unpredictability investing in China has compared with Western markets.

“But investors have historically been rewarded with long-term outperformance. Indeed, an investment in the MSCI China Index from January 2000 to the end of August 2021 would have generated a 402% return,” the firm said. In the past, volatility has served as buying opportunities for many long-term investors.

2. Chinese stocks don’t move in lockstep with other equity markets

The country’s equity markets are useful as a portfolio-diversification tool. China A-shares are renminbi-denominated stocks in companies based in mainland China that trade on the Shanghai or Shenzhen stock exchanges. The A-shares have a correlation of 0.32 with global equities over the last 10 years, meaning they move in different directions almost 70% of the time, the firm said.

“Holding A-shares in a global portfolio may help generate a better risk-return profile,” it said.

3. Foreign investors are still buying China equities, despite recent turmoil

August marked the ninth straight month of positive flows for A-shares, which suggests a “buy the dip” mentality among global investors. The Chinese government has been fostering greater cross-border investment with the launch of the Shanghai and Shenzhen Stock Connect programs 2014 and 2016, respectively, the firm said.

In so-called “southbound” trades, mainland China residents use the Shanghai or Shenzhen exchanges to purchase Hong Kong-listed stocks. In “northbound” trades, investors outside of mainland China can use the Hong Kong exchange to buy A-shares in Shanghai or Shenzhen.

Vanda Research, which tracks activity among retail investors, last month said retail purchases of US-listed Chinese stocks hit their highest in five years. Net purchases of American depositary receipts of Chinese companies had surpassed $400 million, led by buying of Alibaba shares.

Allianz also pointed to a handful of other factors that investors should consider when thinking about whether to invest in China’s stock market. They include the fact that China’s equity market offers multiple options for investment, and China’s A-shares were less affected by recent volatility. Also, major global indices are adding large numbers of Chinese stocks, while innovation and transformation are driving China’s growth story.

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Chinese e-commerce site JD.com surges 17% as the company reports record user growth in the 2nd quarter and plays down impact of tech crackdown

FILE PHOTO: JD.com sign is seen at the World Internet Conference (WIC) in Wuzhen, Zhejiang province, China, October 20, 2019. REUTERS/Aly Song
JD.com sign is seen at the World Internet Conference (WIC) in Wuzhen

  • Chinese e-commerce giant JD.com jumped as much as 16.6% on Tuesday reporting earnings.
  • Second-quarter revenue came in 26% higher year-over-year, fueled by a record 32 million new users.
  • Some investors seemed to be wading back into Chinese tech, with big-name investors like Cathie Wood buying the dip.
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Chinese e-commerce giant JD.com jumped as much as 16.6% in Hong Kong on Tuesday after the company reported record user growth and shrugged off the worst of Beijing’s regulatory crackdown.

The stock, listed on the Hong Kong stock exchange, surged as high as $284, up from $243.60 at the previous day’s close.

Second-quarter revenue came in more than 26% higher year-over-year, above analyst expectations. That growth was fueled by a record 32 million new users, bringing the total number to over 530 million. However, profits fell sharply, owing to higher marketing and administrative costs.

For months, Chinese businesses have been battered by a suite of harsh regulations restricting sectors from tech to school tutoring. On the company’s earnings call, JD.com execs played down the long-term impact of the government’s campaign.

“I believe you have all paid attention to and may be concerned about the recent regulatory changes,” said Xu Lei, CEO of JD’s retail division. “We believe these policies are not intended to restrict or suppress the Internet and relevant industries but rather to create a fair and orderly business environment.”

“We believe that the regulatory goals are conducive to JD’s long-term business growth,” Xu added.

Some international investors seemed to be wading back into Chinese tech stocks on Tuesday, with big-name investors like Cathie Wood buying the dip. Wood’s Ark Autonomous Technology & Robotics ETF bought nearly 165,000 shares in JD.com on Monday, following the earnings call.

“For the first time in months, I had a heavy tilt to global, longer-term investors coming to buy [Chinese tech shares],” Andy Maynard, a trader at investment bank China Renaissance, told the Financial Times.

Alibaba and Tencent were also up more than 9% and 8%, respectively, on Tuesday.

Still, Tuesday’s rally was not enough to offset the beating that big Chinese tech stocks have taken this year. At Tuesday closing prices, Tencent, Alibaba, and JD.com are still down 16%, 28%, and 18% on the year, respectively.

JD.com shares closed at 280 Hong Kong dollars, equivalent to about $36.

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Tencent warns China’s regulatory crackdown on internet companies isn’t over yet

Tencent
Tencent’s booth at the World Artificial Intelligence Conference in Shanghai, China, July 7, 2021.

Tencent warned on its second-quarter earnings call that China’s regulatory crackdown on internet companies will continue, as Asian tech stocks stumbled again after a series of volatile weeks.

“We should expect in the future, in the near future, more regulations should be coming,” Martin Lau, Tencent’s president said on the call. “This should be expected because the regulation has been actually quite loose over an industry like the internet, considering its size and the importance.”

Lau asserted the tightening regulations weren’t an attempt by the Chinese government to squash the industry. Instead, he framed them as a way to identify and correct issues, and to enforce social responsibility and fair behaviour among companies.

“The government does recognize the importance on the economic side and social side of the internet industry and also the contribution of the industry to global competitiveness,” he added, before saying Tencent would be able to comply with the new rules.

According to Lau, a similar tightening of regulations could also hit European and US tech firms soon, and China was simply ahead of the curve.

China has been putting pressure on various key sectors, but especially tech and internet companies, in recent months by introducing and suggesting tighter regulations. Just this week, China’s State Administration for Market Regulation proposed a series of new rules that would clamp down on unfair competition between internet companies.

This came after the country published a five-year plan that named tech innovation, internet finance, education, and other sectors as industries that would see new regulations come into play.

Earlier this month, Tencent stock fell as much as 10% after a state-led media outlet criticised online gaming, describing it as “spiritual opium” and “electronic drugs,” which fueled investors’ fears of tighter regulations.

The developments have led to volatile trading in recent weeks. Alibaba’s Hong Kong-listed shares closed 5.54% lower on Thursday, and its US-listed shares were down 3.74% in pre-market trading on the New York Stock Exchange.

Tencent itself closed 3.44% down in Hong Kong, despite beating market expectations and posting a 29% jump in profit for the second quarter year-on-year to 42.6 billion renminbi ($6.6 billion).

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This Taiwanese manufacturer is now Asia’s most valuable company after China’s crackdown on big tech firms

FILE PHOTO - A logo of Taiwan Semiconductor Manufacturing Co (TSMC) is seen at its headquarters in Hsinchu, Taiwan August 31, 2018. Picture taken August 31, 2018. REUTERS/Tyrone Siu
A logo of Taiwan Semiconductor Manufacturing Co (TSMC) is seen at its headquarters in Hsinchu

  • Taiwan Semiconductor Manufacturing Company, has surpassed Tencent to become Asia’s most valuable company.
  • The breaking point came on Tuesday when a dip in Tencent stock officially made TSMC the most valuable Asian company by market cap.
  • The company has doubled its share price since the start of the pandemic in March 2020.
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Taiwan Semiconductor Manufacturing Company, the world’s biggest semiconductor maker, has surpassed Tencent to become Asia’s most valuable company after Beijing’s harsh stance against Chinese tech battered Tencent and its peers.

Tencent shares have fallen nearly 30% since the beginning of June amid a smattering of new rules and regulatory efforts. That has let TSMC, whose share price has remained mostly flat since June, creep up on Tencent’s valuation.

The breaking point came on Tuesday when a dip in Tencent stock officially made TSMC the most valuable Asian company by market cap, at $579 billion on Wednesday. Tencent’s market cap was sitting around $557 billion, while Alibaba, the next biggest Asian company, came in at $481 billion.

TSMC has soared as overwhelming global demand for its wafers has hit industries from autos to gaming. During the pandemic, too, a rise in stay-at-home purchases like video game systems and computer gear made for bountiful business in the chip industry.

The company has doubled its share price since the start of the pandemic in March 2020 – during which time TSMC has declared several multi-billion dollar capex rounds, now totaling north of $100 billion.

Even still, the massive worldwide chip shortfall combined with the slow pace of ramping up production means business is set to boom for years.

TSMC’s market position, earning over half of global chip manufacturing revenue, is so dominant that some analysts have even argued the company could become a flashpoint in cross-strait relations between Taiwan and mainland China.

In July, TSMC chairman Mark Liu addressed fears around a potential Chinese invasion of Taiwan, which considers the island part of its territory.

“Everybody wants to have a peaceful Taiwan Strait. Because it is to every country’s benefit, but also because of the semiconductor supply chain in Taiwan – no one wants to disrupt it,” he said.

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Chinese e-commerce giant Alibaba opens NFT auction site for artists and game developers

An office building of Alibaba Group is pictured on August 10, 2021 in Zhengzhou, Henan Province of China.
An office building of Alibaba Group is pictured on August 10, 2021 in Zhengzhou, Henan Province of China.

  • E-commerce giant Alibaba has launched an NFT marketplace on its auction platform, SCMP reported Tuesday.
  • Several NFTs already have listings on the Chinese service, but bidding will not start until September.
  • NFTs have slowly been gaining traction in China, even as Beijing’s cracks down on cryptocurrencies.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Chinese e-commerce heavyweight Alibaba Group has opened a marketplace for trading non-fungible tokens on its auction platform, the South China Morning Post reported Tuesday.

The company expects artists, musicians, writers and game developers to sell NFTs of their work on the “Blockchain Digital Copyright and Asset-Trade” marketplace, according to the report from SCMP, which is owned by Alibaba.

Several NFTs have already been listed on the service by creators. They will go to auction next month with a minimum bid of 100 yuan, approximately $15. To participate, bidders must pay a deposit of 500 yuan, or around $77.

NFTs are unique digital tokens such as images, videos, sound clips or certificates that are built on a blockchain. Ownership is inscribed on the ledgers the tokens are built on – this is crucial, as often anyone can view an NFT, but only one person can actually own it. They are therefore often popular among collectors.

The digital tokens have staged a comeback after demand cooled off in the early summer. Trading volumes on NFT platform OpenSea have soared in recent weeks, as more tokens are sold and their worth accelerates.

Items listed on Alibaba Auction include a painting of a local Sichuan landmark, as well as art based on major franchises such as “Star Wars”, the video game “Wasteland 2”, and “Grand Theft Auto”, according to SCMP journalist Josh Ye. He tweeted screenshots of the NFTs on the marketplace.

“We are not sure if these are properly licensed in the first place,” Ye said.

The NFTs will be will be minted on the New Copyright Blockchain, which is run by the Sichuan Blockchain Association Copyright Committee. They can be stored and viewed through Bit Universe, an application that is part of the Chinese messaging and social media app WeChat.

NFTs have slowly been gaining traction in China, even as Beijing cracks down on cryptocurrency products and mining. The government appears to be more receptive to blockchain products, and in June, the SCMP reported that China is aiming to incorporate blockchain technologies into its development and economic plans.

Alibaba-affiliated financial service firm Ant Group and SCMP itself have launched NFT projects this summer. In addition, Chinese entertainment giant Tencent joined the NFT world earlier in August with its own token-trading platform, where it sold audio clips from a popular talkshow.

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China targets internet giants with new competition rules, putting pressure on tech shares

china crowd
China’s latest census hinted that the country might face a demographic crisis down the road, as it contends with an aging work force and falling birth rates.

  • China’s competition regulator published a draft version of rules for internet businesses Tuesday, Reuters reported.
  • Chinese tech stocks fell as investors fretted about Beijing intensifying its regulatory crackdown.
  • The proposed rules aim to stamp out fake reviews, stop hijacks of customers and restrict use of data tools.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

China’s competition regulator published draft new rules targeting internet providers on Tuesday, Reuters reported, with the move sending their stocks lower as Beijing’s crackdown on the tech sector intensified.

The proposals by the State Administration for Market Regulation aim to clamp down on unfair competition by targeting fake reviews online and restricting how internet companies use customer data, among other measures.

Shares of major Chinese internet companies fell after the draft rules were published. E-commerce heavyweight Alibaba closed 4.77% lower in Hong Kong. Its US-listed shares in New York were down more than 3% in premarket trading.

Tencent shares also struggled, sliding 4.14% in Hong Kong. The entertainment company’s share price went on a volatile ride in July, when a state-run media outlet’s criticism of online gaming harms raise concerns of a clampdown on the sector.

In recent months, Chinese regulators have intensified their scrutiny of the technology and education sectors, prompting investors to pull out of companies that could be affected.

After new restrictions on tutoring businesses drove a rout in education companies’ stocks in July, Beijing officials said they would be more cautious about how they published regulations and would take stock volatility into consideration.

Last week, though, China’s government released its five-year plan, which outlines new regulations for key industries including artificial intelligence, internet finance and big data.

The State Administration for Market Regulation is seeking public feedback on its proposed regulations, with a deadline of September 15.

The rules put forward include a ban on companies hiding negative reviews and on publishing false information on consumer traffic, media reports said. They would also be barred from creating misleading stories meant to damage the reputation of competitors, and from offering “red envelope” cash rewards for good reviews.

Internet-based businesses would no longer be allowed to use data and algorithms to learn about potential customers in order to hijack them. Regulators also want to forbid companies from collecting and analyzing data about their business competitors.

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