Sage Investment Club

Lintao Zhang Alibaba (NYSE:BABA) rose more than 8% Monday in Hong Kong after founder Jack Ma ceded control of sister company Ant Group, whose planned 2020 IPO fell apart when Ma’s criticism of Chinese regulators got both companies in hot water. BABA rose as much as 8.3% to 110 Hong Kong dollars ($14.09) before pulling back to 108.9 Hong Kong dollars ($13.95) as of 10:30 p.m. ET Sunday on news of Ant Group’s ownership restructuring. The company’s U.S. shares − which are each worth eight Hong Kong ones − closed Friday in New York at $107.40. The Hong Kong rally implies Alibaba’s U.S. shares were worth about $112.72 as of 10:30 p.m. ET Sunday night. Alibaba (BABA) rose following word that Ma − a Chinese billionaire who founded both BABA and Ant − had agreed to a deal that eliminated his effective majority control of Ant Group, a massive Chinese fintech. Ant announced over the weekend that Ma would no longer control 34% of two holding companies that had collectively owned 53.46% of the company: (Source: Ant Group) Instead, he and his holding-company partners would henceforth vote independently and each hold 20% of one holding company that owns 31.04% of Ant Group. That essentially means Ma will only own about 6% of Ant: (Source: Ant Group) Seeking Alpha contributor Jonathan Weber recently looked at why Alibaba (BABA) has rallied more than 70% from its lows of two months ago. This is a developing story. Check back for updates.

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