Alibaba (NYSE:BABA) stock is climbing 6% this morning after Beijing approved a fundraising initiative by Alibaba’s subsidiary, Ant Group. Ant owns a popular mobile payment app. Additionally, somewhat positive macroeconomic data is likely also helping to lift BABA stock this morning.
Alibaba is a China-based e-commerce and cloud giant. It owns 33% of Ant.
Fundraising Effort Approved
The Chinese government has agreed to allow Ant to raise the amount of capital controlled by its consumer finance division to 18.5 billion yuan versus 8 billion yuan previously. Under the arrangement, Ant will retain a 50% stake in the unit while other investors, including a Chinese municipal government, will own the other half.
In late 2020, Beijing blocked Ant from carrying out its planned initial public offering and also vetoed a deal under which a government-controlled company was going to buy 20% of the shares of the firm’s consumer finance arm. Additionally, the government forced the company to follow new rules that significantly reduced its valuation.
These developments all came after Alibaba’s founder Jack Ma harshly criticized China’s regulators and banks in October 2020. He was subsequently not seen in public for months.
Positive Economic Data for BABA Stock
An index measuring Chinese manufacturers’ confidence in their outlook reached a ten-month high. However, the overall index of the country’s manufacturing index dropped to 49 last month from 49.4 in November.
“Overall, the pandemic continued to take a toll on the economy in December. But optimism in the sector significantly improved thanks to further optimized Covid controls,” China Daily, a government-controlled newspaper, quoted Wang Zhe, a senior economist at Caixin Insight Group, as saying. Caixin conducted the research for the survey and published its data.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.