Alibaba, one of China’s internet giants, has made a bold move by spending billions on buying back its shares in an effort to boost its market value amidst a historic stock rout in the country. The company announced on Tuesday that it had repurchased $12.5 billion worth of shares from the US and Hong Kong markets, representing 5.1% of its outstanding shares in the fiscal year ended March 31.
This buyback marks the largest share repurchase by a Chinese tech company in the past year, with Alibaba spending $4.8 billion in the first quarter alone, its second biggest quarterly repurchase in history. The decision comes at a time when Chinese regulators have been urging listed companies to repurchase shares to stabilize market confidence.
Alibaba’s stock has seen a significant decline of more than a quarter of its value in the past year, prompting the company to take action to demonstrate confidence in its future prospects. The company has signaled that it plans to buy even more shares, with a raised buyback plan of an additional $25 billion through March 2027.
Other Chinese tech companies, such as Tencent, have also ramped up their share buybacks in the past year. Tencent spent a record 49 billion Hong Kong dollars ($6.3 billion) repurchasing shares in 2023, more than it had spent in total over the past decade. The gaming and social media giant has pledged to double the size of its share repurchase to over 100 billion Hong Kong dollars ($12.8 billion) in 2024.
Overall, companies listed in Hong Kong spent a record 126 billion Hong Kong dollars ($16.1 billion) buying back shares in 2023, with firms in mainland China repurchasing 120 billion yuan ($16.6 billion) worth of stocks. These efforts are part of a wider campaign by Beijing to address the stock rout and stabilize market confidence.
While share buybacks can potentially boost investor confidence, their impact on reviving global investor confidence in Chinese stocks may be limited in isolation. Investors remain concerned about China’s economic slowdown and other challenges facing the economy.
