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Charly Triballeau / AFP via Getty Images
The sharp drop in Alibaba Group’s shares on Thursday, triggered by news that China is investigating the e-commerce giant on antitrust issues, has spread to the shares of
SoftBank Group,
the Japanese holding company that is Alibaba’s biggest investor.
SoftBank (ticker: 9984.Japão) has a 24.9% stake in
Alibaba
(BABA) worth about $ 143 billion. This is greater than SoftBank’s current market capitalization of $ 135 billion. The 13% drop in Alibaba’s shares on Thursday reduced SoftBank’s stake in the company by more than $ 22 billion.
SoftBank founder Masayoshi Son made a $ 20 million investment in the budding e-commerce company of his friend Jack Ma in 2000, in what was arguably the best risky investment in history.
SoftBank in 2020 is in an aggressive campaign to sell assets to raise money to repurchase shares and pay off debts. Since the rock bottom hit the market in the spring, SoftBank’s shares have more than tripled, taking the company’s US-listed stocks to a 20-year peak. SoftBank sold a small slice of its Alibaba shares as part of the asset sales program, but continues to maintain most of its position.
A SoftBank spokesman declined to comment.
Meanwhile, the market’s interpretation of how the situation might affect other China-based e-commerce games is decidedly mixed.
JD.com
(JD), a broad-based online retailer that originally focused on consumer electronics, says on its website that it is “China’s largest online retailer and largest general retailer, as well as the country’s largest Internet company in revenue” . While you may see an investigation into Alibaba as good news for JD.com, investors seem concerned that it may also be examined more closely. JD fell 1.1% to $ 84.49 on Thursday.
But the market sees high for
Pinduoduo
(PDD), an online retailer based in China. Pinduoduo’s shares shot up 8.9% to $ 152.75.
SoftBank shares fell 4.6% on Thursday to $ 37.25.
Write to Eric J. Savitz at [email protected]