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Chinese ecommerce giant Alibaba reported better-than-expected results late last week, but its stock fell by almost 4%.

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What's going on?

Ecommerce giant Alibaba flashed its trademark smile after reporting better-than-expected results late last week only to turn that upside-down frown upside down again when its share price dropped 4%.

What does this mean?

With coronavirus lockdowns encouraging more people to shop online for the essentials, the Chinese companys revenue increased 22% in the first three months of the year. And while supply-chain disruptions did hit some of its sellers, Alibaba said its seen a steady recovery since March. Then again, Alibabas definition of recovery probably differs from most other companies: a record-breaking trillion dollars worth of merchandise flowed through its platform in the past year alone (tweet this).

But first-world or not, Alibaba does have problems: the companys major investments in stocks like ride-hailing company Lyft and Chinese social media platform Weibo have soured due to the coronavirus-induced market slump. Its quarterly profit wouldve increased by 11% if not for those losses, but as it was, that profit fell almost 90%.

Why should I care?

For markets: Talk about bad timing.
Despite the better-than-expected results, Alibabas Hong Kong-listed stock dropped almost 4%. It fell victim to a wider sell-off in Hong Kong stocks after Chinas announcement that a national security law would be imposed on the city, limiting its freedom. The move which could trigger both a new wave of protests and a flare-up of tensions with the US caused one measure of Hong Kong stocks to head for its worst daily drop since the 2008 financial crisis.

The bigger picture: Mano e mano.
The US president has already threatened to retaliate if China goes ahead with the law, stoking already-simmering tensions between the two superpowers. Just last Wednesday, for example, the US Senate passed a bill that would bar Chinese companies from listing on US exchanges and even go as far as to delist existing ones like Chinese tech companies Baidu and, you guessed it, Alibaba.

Originally posted as part of the Finimize daily email.

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