Actions of Ali Baba (NYSE: BABA) climbed 5.5% on Tuesday after reports surfaced that the founder of the Chinese e-commerce titan was in fact not absent.
After several news outlets noted that Alibaba founder Jack Ma had not been seen publicly since October, when he criticized Chinese regulators for stifling innovation, speculation erupted over his fate. . That speculation, however, fizzled out after CNBC reported that Ma was not absent and that she was simply “weak at the moment.” The news allayed investor concerns that Chinese regulators were planning to severely attack Alibaba in retaliation for Ma’s comments.
Tuesday also announced that the New York Stock Exchange no longer plans to delist three Chinese companies. The NYSE had previously found it necessary to do so to comply with an executive order from President Donald Trump, which sought to prevent Americans from investing in companies that would support the Chinese military. While Alibaba is not one of three companies the NYSE had planned to delist, the news helped reduce investor fears that U.S. regulators would apply a broader crackdown on Chinese companies.
Investing in Chinese stocks offers the potential for attractive returns, in part due to the massive size and rapid growth of the Chinese economy. Unfortunately, this also carries considerable risks, including the possibility of severe crackdowns from Chinese and US regulators. While Alibaba appears to have avoided these troublesome short-term scenarios, investors should be aware that regulatory risk remains.
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