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Jack Ma, founder of Alibaba, in Paris in 2019.
Hong Kong (CNN Business) — For Chinese tech tycoon Jack Ma, there's a price to freedom: $26 billion.
Alibaba, the Chinese e-commerce giant Ma co-founded, saw its Hong Kong-listed shares plunge as much as 9.4% Tuesday after Chinese state media reported that an individual surnamed "Ma" in the city of Hangzhou — where Alibaba is based — had been detained on national security grounds. According to China's state broadcaster CCTV, the suspect was placed under "compulsory measures" on April 25 on suspicion of "colluding with overseas anti-China hostile forces" to "incite secession" and "incite subversion of state power." The one-sentence report, which was swiftly picked up by other state media outlets and alerted across Chinese news platforms, triggered panic selling in Hong Kong, erasing an estimated $26 billion from Alibaba's market value within minutes. Amid the frenzy, Hu Xijin, the former editor-in-chief of the state-owned nationalist tabloid the Global Times, rushed to clarify on China's Twitter-like Weibo that the report was misleading because the name of the suspect in question has three characters. Jack Ma's Chinese name, Ma Yun, has only two characters. (CCTV later quietly updated its original report to match Hu's assessment). To further dispel concerns, the Global Times reported the accused man was born in 1985 in Wenzhou (while Jack Ma was born in 1964 in Hangzhou) and worked as the director of hardware research and development at an IT company. The clarifications led to a rebound, with Alibaba recovering the majority of its losses by the day's end. The market's roller coaster reaction is the latest sign of just how skittish investors are getting over China's embattled tech sector, which has been a target of the Chinese government's heavy-handed regulatory crackdown since late 2020. Despite recent signals from the Chinese government it is preparing to rollback the campaign due to the economic impact, as first reported by the Wall Street Journal, the market frenzy on Tuesday indicates investor confidence remains shaky. "I thought this was kind of an odd episode," said Victor Shih, a political science professor at the University of California San Diego. "Whether that was a warning of sorts to the technology sector as a whole, or perhaps Jack Ma personally. Who knows? But it's certainly demonstrated the government does not even have to arrest a senior technology executive to erase tens of billions of dollars from a company's market valuation. It just needs to release some kind of information," Shih added. "That's quite powerful. And certainly what happened yesterday was a clear illustration of that power, whether it was delivered or not." --------ADVERTISEMENT--------
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