Alibaba has seen its stock head to record lows while investors look to rival JD.com instead as it continues to recover.
Deutsche Bank AG’s Leo Chiang slashed his target price for Alibaba’s Hong Kong stock by almost four per cent on Monday, citing “near-term challenges,”
Chiang however raised his target for JD.com by 16 per cent noting “resilient growth amid macro uncertainties.”
Morningstar Inc.’s Chelsey Tam repeated the claims, saying that “Alibaba’s challenges go beyond the economic cycle” and that its rival JD.com offers “more clarity on the long-term margin improvement.”
The Chinese ecommerce powerhouse share price was down three per cent in Hong Kong on Tuesday, which marks and 18 per cent drop off this month, wiping out the gains that the company made in October.
JD.com shares were also down on the same day, falling in line with the wider market, however, in contrast to Alibaba, it is up 46 per cent from the low it saw in August.
Alibaba’s fall comes at the same time as Beijing’s heightening crackdown on Big Tech, which will mean that Alibaba will have to shift about five per cent of its ecommerce revenue to its competitors, including JD.com and Pinduoduo, according to a senior portfolio manager at Vontobel Asset Management.
This comes as part of President Xi Jinping’s call for “common prosperity” as he aims to widen the middle class demographic in the country.
The share price news also comes at the same time as Alibaba and its rival Tencent were been ordered to pay a total of 21.5 million yuan ($3.4 million) in fines by China’s competition watchdog, earlier this week.
The companies have been ordered to pay 500,000 yuan ($78,000) for each of the 43 antitrust violations they have broken, according to the State Administration for Market Regulation said in a statement on Saturday.