Alibaba sinks 7pc in selloff as Fed vows unlimited QE

Hong Kong and mainland stocks slumped yesterday, with Alibaba (9988) falling 7.1 percent to HK$170 as its shareholder Japanese conglomerate SoftBank said it is planning a share buyback.

And US stocks opened lower following steep overnight declines as investors awaited progress on a spending package from Congress and the US dollar fell after the Federal Reserve announced a massive second wave of initiatives to support a shuttered American economy, including buying an unlimited amount of bonds to keep borrowing costs low.

SoftBank said it is selling or monetizing up to 4.5 trillion yen (HK$310 billion) in assets to buy back 2 trillion yen of its shares and reduce debt.

Given fragile markets SoftBank may look to sell its stakes in the merged Sprint and T-Mobile US or Chinese e-commerce giant Alibaba, Redex Holdings analyst Kirk Boodry said.

CEO Masayoshi Son previously monetized part of the stake in Alibaba, of which SoftBank currently owns 25 percent, in a complicated transaction ahead of the 2016 purchase of chip designer Arm.

In Hong Kong the benchmark Hang Seng Index gave up 1,108.94 points, or 4.86 percent at 21,696, and all blue chips fell.

However, supply chain manager and retailer Li & Fung (0494) skyrocketed to close 88 percent higher at HK$0.94 after the company released a plan to go private last Friday at HK$7.22 billion.

Meanwhile, apparel retailer Esprit (0330) halted trading in its shares pending the release of an announcement.

In the mainland, the Shanghai Stock Exchange Composite Index fell 3.11 percent to 2,660 while the Shenzhen Stock Exchange Composite Index shed 4.26 percent, or 72.58 points, to close at 1,631.

The National Development and Reform Commission said the surveyed urban unemployment rate in February rose amid the coronavirus outbreak

In the US, the S&P 500 dropped even after the Fed's move helped futures wipe out a loss that reached 5 percent overnight when Congress failed to agree on a stimulus bill.

The US dollar turned lower and Europe stocks trimmed a drop on the news. With main American political parties failing to agree on a quick jolt to the sinking economy with a US$2 trillion (HK$15.6 trillion) stimulus, Morgan Stanley warned the epidemic could cause GDP to shrink a record 30 percent in the second quarter.

Elsewhere, the yuan weakened 526 bps to 7.1187 per US dollar, a 5-month low.