Alibaba Stock Hits Low Amid Chinese Market Woes
The country's stock market has lost 30 percent of its value in a month, and U.S.-listed stocks of Chinese companies are not immune anymore.
The stock of Chinese e-commerce giant Alibaba Group, which has ambitions to expand its entertainment business, hit an all-time low in the U.S. on Tuesday amid fears that falling stock markets in China may be a sign of broader economic woes and valuations that have become too rich.
Alibaba was the most heavily traded individual stock on the New York Stock Exchange on Tuesday and closed the day down 0.8 percent after falling as low as $76.21, its lowest price ever since its IPO last year.
On its debut in September, Alibaba's was the largest U.S. IPO in history, raising $21.8 billion.
Chinese stock markets have shed an estimated $3.2 trillion in value since mid-June when a sell-off began. Some have spoken of the stock market bubble having burst in China. Investors are getting out of the market because valuations are now seen as being too high and because of fears of an economic slowdown in China, the world's second-biggest economy.
Meanwhile, the group's film unit, Alibaba Pictures, which trades in Hong Kong, saw its stock decline 5.64 percent on Wednesday.
The U.S. sell-off is also affecting other stocks with major entertainment industry interests. Internet search engine Baidu fell 0.8 percent on Tuesday, while streaming video provider Youku Tudou was down 6.7 percent.
The Chinese government has introduced a number of measures to stop the slide, such as halting initial public offerings and requiring brokerages to pour funds into the market.
The efforts have failed to stem the losses, and the Shanghai Composite Index has fallen five times in the past six days, trading down nearly six percent midday on Wednesday.
"Investors are fleeing anything associated with China," Brendan Ahern, chief investment officer at Krane Fund Advisors in New York, told Bloomberg News. "They don’t want to have anything related to China in their portfolio. Investors are reading the risks around China, and there is a spillover effect in the U.S.-listed stocks."