Shares of Alibaba (9988) plunged 6.1 percent on disappointing results dragging down Hong Kong stock market but Joseph Tsai, its cofounder, said investing in the e-commerce giant was better than opting for 10-year treasury bills.
Tsai said the number of outstanding shares of Alibaba will be reduced by about 3 percent annually over the next three years, which, together with the dividend payout of US$1 (HK$7.80) per American depositary share means the yields could reach 4.5 percent, which is very close to yields for 10-year treasury bills.
The share plunge came after Alibaba's profit fell 69 percent year on year to 14.4 billion yuan (HK$15.7 billion) in the December quarter, driven by its equity investments and a decrease in income from operations due to impairments related to its video streaming service Youku and supermarket chain Sun Art.
Additionally, Alibaba announced that its board of directors has approved an increase of US$25 billion in its share repurchase program, raising the size of the repurchase to US$65 billion, while the validity period of the repurchase has been extended to the end of March 2027, showing the confidence of the management and in the outlook for the business and its cash flow.
In other news, short bets on most Asian currencies eased marginally but remained firmly in bearish territory, a Reuters poll found yesterday, as diminishing hopes of an early US interest rate cut kept the dollar buoyant and market volatility in regional powerhouse China dampened investor confidence.
