Amid rising negativity, Alibaba rebounds on the back of Chinese support and further investment in its home ground.
Surrounded by a bunch of criticism and tumbling stock prices, Alibaba Group Holding Limited got a most needed support from its home country. State Council of China premier Mr. Li Kegiang declared that the country will provide full support to development of e-commerce and assist companies looking for international expansion with guidance. He further stated to provide all the required support to Alibaba and its competitor JD.com.
In Beijing yearly parliamentary meeting of China witnessed that Mr. Kegiang was emphasizing on the internet plus plan China has been following. Fundamentally, the policy is based on publicizing mobile internet; cloud computing, internet banking and logistics essentials to simplify the expansion of e-commerce.
He also emphasized on the importance of investing in the industry. As reported Mr. Kegiang stated, "In addition to the 40 billion yuan ($6.38 billion) government fund already in place for investment in China's emerging industries, more funds need to be raised for promoting business development and innovation."
However, a critical aspect of the announcement is the division of support offered to Alibaba Group Holding ltd. by Mr. Kegiang will be given out to the rivals of the company. Actually the company's biggest rival is JD.com has been projecting admirable growth, with surging transactions on its platform. Furthermore, some of the other social network websites and entertainment opponents like Tencent Holding and Baidu are also expecting some sort of support from the country. The company is under severe competition with these companies related to international expansion and financial operations.
Amusingly, Mr. Kegiang announcement came on a following day after Alibaba news ofinvesting around $382 million in Enlight Media appeared, which are the leading TV and film distributors and producers of China. The entertainment company of China reported in a Shenzhen Stock Exchange filing that around 2.8 billion shares were sold by the company and from which 2.4 billion were bought by Alibaba Company. This number makes Enlight Media to allot almost 9% of ownership rights to the Chinese company. Currently, it holds an 8% shares in Youku Tudao and Huayi Brothers and 16.5% stake in ChinaVision.
The commendation occurs at the time when the e-commerce giant company was invigorating itself from severe criticism related sales of fake goods on its website. Furthermore, the latest issue of brushing pointed fingers towards the company's real value of merchandise. Nonetheless, Alex Yao an analyst at JP Morgan ignored all the problems and assigned an overweight rating to Baba stock with an extremely hopeful target price of $117.