Alibaba, JD.com shares slide after Beijing slams price-cut promotions

[HONG KONG] Shares of Alibaba Group Holding and JD.com slid in Hong Kong after China’s market watchdog reprimanded top Chinese e-commerce players for what it said were misleading sales promotions.

Alibaba shares fell as much as 5.9 per cent on Thursday (Jun 11) morning in Hong Kong, the biggest intraday decline in nearly three months. JD.com also dropped as much, the most since November.

The stock rout came after the Beijing branch of State Administration for Market Regulation summoned the two, along with PDD Holdings, ByteDance and Xiaohongshu Technology, over what officials said was false advertising during the annual “618” midyear online shopping fest, according to a report by state television CCTV.

The regulator blasted some of the companies for seemingly promising tens of billions of yuan in subsidies, according to the CCTV report. Both Alibaba’s online marketplaces Tmall and Taobao as well as JD.com failed to provide details of the actual subsidies given by the company and participating brands, it said.

The name-and-shame campaign marks the latest run-in between the Chinese market regulator and the country’s e-commerce juggernauts. For months, Beijing has sought to curb a race-to-the-bottom competition that’s embroiled some of the country’s biggest companies in a bruising price wars that’s eroding profits.

“The move signifies further tightening of regulatory scrutiny,” said Bloomberg Intelligence analyst Robert Lea.

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Fear is growing that the Internet giants’ price-slashing campaign could force retailers across the country to incur losses, ultimately weighing on a nascent and fragile return to inflation in the world’s second largest economy.

Consumer prices climbed a smaller-than-expected 1.2 per cent in May, a sign of persistent weak consumer demand that’s hampering businesses’ attempts to pass on rising materials, production and logistics costs.

The market watchdog also called out PDD and the e-commerce platforms of TikTok-owner ByteDance and Xiaohongshu for disingenuous promotions during the annual shopping bonanza, CCTV said. BLOOMBERG