Alibaba Commits to More Buybacks

Stocks for Alibaba jumped 11% at the news as the e-commerce company seeks to increase investor confidence after the huge hit that its shares have taken in the last year. Shares are currently valued at about one-third of the record prices they experienced in October 2020 after regulations and further regulatory fears last year saw the internet and technology sector in China hit particularly hard.

“Alibaba’s stock price does not fairly reflect the company’s value given our robust financial health and expansion plans,” said Toby Xu, deputy chief financial officer for Alibaba.

The previous buyback program resulted in Alibaba buying back around 56.2 million ADRs, with an approximate value of $9.2 billion.

Alibaba also appointed a new independent director, Weijian Shan, executive chairman of the investment group PAG (headquartered in Hong Kong), to its board who will serve on the audit committee. Shan is replacing Börje Ekholm, CEO of Ericsson, a major telecommunications equipment company, who will be retiring from the board.

Alibaba’s commitment to growth and buybacks that benefit investors reflect the strong fundamentals that the company, and other giants within the Chinese technology sector, continue to exhibit. Investments in China could be priming for greater growth as pressure comes from top Chinese officials to conclude regulations.

• The KraneShares CSI China Internet ETF (KWEB B+) offers exposure to some of the biggest companies within China’s internet sector. This includes companies that develop and market internet software and services, provide retail or commercial services via the internet, develop and market mobile software, and manufacture entertainment and educational software for home use. Alibaba is carried at a 10.07% weight within the fund, and KWEB has an expense ratio of 0.70%.
• The KraneShares Hang Seng TECH Index ETF (KTEC) offers exposure to internet stocks, e-commerce companies, fintech firms, and other tech-related companies. KTEC tracks the 30 technology companies in Hong Kong’s tech sector with the highest free float market capitalization and invests primarily in China H shares — meaning shares of stocks that are incorporated in mainland China and trade on the Hong Kong Stock Exchange. Alibaba is carried at a 9% weight within the fund, and KTEC has an expense ratio of 0.69%.
• The KraneShares MSCI All China Index ETF (KALL) tracks the MSCI China All Shares Index, a benchmark of companies that are based in and headquartered in China, as well as listed in Mainland China, Hong Kong, and the U.S. The fund is broadly diversified across the Chinese economy, with exposure to sectors such as consumer discretionary, financials, communication services, consumer staples, and more. Alibaba is carried at a 6.33% weight within the fund, and KALL currently has an expense ratio of 0.49%.

Exposure to Alibaba has transitioned from ADRs to Hong Kong shares within the KraneShares funds as delisting concerns have prompted the firm to move allocations over to best protect their investors. Other KraneShares funds with Alibaba exposure include the KraneShares Emerging Markets Consumer Technology Index ETF (KEMQ) and the KraneShares China Innovation ETF (KGRO).

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