Alibaba Declines as Chinese ADRs Retreat on Economic Slowdown

Updated on
  • Online retailer's sales growth seen slowing to 34% from 46%
  • Manufacturing slowdown underscores weakest growth in 25 years

Alibaba Group Holding Ltd., China’s biggest online retailer, slid for an eighth day as fresh data highlighting China’s weakening economy stoked concern that the company’s sales growth is slowing.

The American depositary receipts retreated 0.4 percent to $77.99 in New York on Monday, capping the longest slump since the company’s September debut. The drop pushed Alibaba’s decline from its high in November to 35 percent. The Bloomberg China-US Equity Index fell 0.8 percent to 118.52, a three-week low.

U.S.-traded Chinese stocks followed a slump that pushed mainland shares to the lowest level in three weeks as data showed that manufacturing trailed economists’ estimates. Traders have been withdrawing from China as its economy expands at the slowest pace in a quarter-century. Alibaba is scheduled to report its financial results for the three months that ended in June on Aug. 12.

“As they report next week, investors will be listening very carefully to the commentary Alibaba makes about the state of Chinese economy, and the state of the Chinese consumer, in particular,” Gil Luria, an analyst at Wedbush Securities in Los Angeles, said by phone on Monday.

Sales Growth

Alibaba sold ADRs for $68 apiece in a record $25 billion initial public offering on Sept. 18. They had climbed as much as 75 percent in the following two months to a record high of $119.15 in November. The company will probably report a 34 percent increase in sales for the June quarter, down from 46 percent in the same period last year, according to the average estimate of 26 analysts surveyed by Bloomberg.

China’s official Purchasing Managers’ Index was 50 in July, compared with the median estimate of 50.1 in a Bloomberg survey and down from June’s 50.2. Numbers above 50 indicate expansion. China’s central bank published draft rules on Friday to tighten control on the nation’s 270 online-payment firms including Alibaba’s finance arm.

LightInTheBox Holding Co., a web-based retailer of China-made goods to overseas markets, tumbled 9.3 percent to $3.63, the lowest since its U.S. listing in June 2013. Jumei International Holding Ltd., which sells beauty products online, sank 6.7 percent to $17.46, dropping the most in four weeks.

The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF slipped 0.5 percent to $39.32 in a third day of declines. The iShares China Large-Cap ETF tracking Hong Kong shares slumped 1.5 percent to $39.89.

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