Is Alibaba’s US$34 billion stock rally justified? Here’s what BofA, Deutsche Bank, Daiwa and Macquarie say about the business makeover

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by Jiaxing Li and Mia Castagnone at

Decision may have more strategic meaning as it can help mitigate the ‘winner’s curse’ given recent crackdown and Beijing’s ‘common prosperity’ agenda: BofA

Investors persevering with Alibaba Group were richly rewarded after the stock logged the biggest gain since November. The market reaction suggests its plan to overhaul the US$257 billion tech empire will bring great benefits to shareholders.

The move is expected to unlock values from its assets, most analysts said, while allaying Beijing’s concerns over the group’s dominance in the local economy. Is the US$32 billion overnight gain in market value in New York, and HK$21 billion (US$2.7 billion) in Hong Kong, justified?

Here’s what the market is saying about Alibaba’s biggest internal revamp since its inception more than two decades ago. [Alibaba is the owner of the South China Morning Post].

Brock Silvers, Kaiyuan Capital: Beijing’s hidden hand?

“Alibaba’s break-up appears to have been orchestrated by Beijing, along with Jack Ma’s sudden reappearance,” managing director Silvers said. “The business unit separation does not seem to result from a strategic impetus, but looks to have deep potential upside for shareholders.”

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