Alibaba shares jump in Hong Kong after record antitrust fine by China

Shares of Alibaba Group Holdings Ltd. surged more than 5% Monday in Hong Kong trading, after the e-commerce giant was fined a record $2.8 billion by China’s antitrust regulator.

On Saturday, China’s State Administration for Market Regulation said Alibaba abused its dominant position over rivals and merchants on its platform. In addition to the fine, Alibaba must revamp its operations and submit a compliance report within the next three years.

“Alibaba accepts the penalty with sincerity and will ensure its compliance with determination,” the company said in a statement. “To serve its responsibility to society, Alibaba will operate in accordance with the law with utmost diligence, continue to strengthen its compliance systems and build on growth through innovation.”

With the dark cloud of the investigation now gone, Alibaba stock
9988,
7.16%

shot more than 8% higher in early Hong Kong trading, before settling down to gains of about 5.5%, setting the stage for its American Depository Receipts
BABA,
-2.16%

to likely jump when trading begins Monday.

“Despite the record fine amount, we think this should lift a major overhang on BABA and shift the market’s focus back to fundamentals,” Morgan Stanley said in a Sunday note.

“Now the penalty is determined, the market’s uncertainty about Alibaba will be reduced,” Everbright Sun Hung Kai analyst Kenny Ng wrote in a note. “The implementation of this penalty is expected to allow Alibaba’s stock price to regain market attention.”

Alibaba’s Hong Kong shares are flat year to date, and up 20% over the past 12 months. Its ADRs are down 4.5% this year, and up 13.7% over the past year.