By Zhang Shidong

Copyright scmp

Alibaba Group Holding’s ambitious investment in artificial intelligence and an endorsement by one of the world’s most influential technology investors lifted its Hong Kong shares to a four-year high.
Star US fund manager Cathie Wood bought a combined US$16.3 million of Alibaba shares, her first investment in the Chinese e-commerce giant in four years and a vote of confidence in the company’s focus on AI and on-demand delivery services.
Wood’s Ark Fintech Innovation ETF bought US$8.18 million of Alibaba’s American depositary receipts (ADRs) on Monday, and her Ark Next Generation Internet ETF made a US$8.1 million investment in the securities on the same day, according to holdings reports by the two funds. Wood is the founder of New York-based Ark Investment Management.
Alibaba’s Hong Kong-listed shares jumped 9.2 per cent to HK$174 on Wednesday, the highest close since September 25, 2021, as trading remained open in the city despite the strongest typhoon since 2018. The ADRs dropped 0.7 per cent to US$163.08 in New York on Tuesday, also near a four-year high. Eight of Alibaba’s Hong Kong shares can be converted into an ADR. Alibaba owns the South China Morning Post.
Wood’s re-entry into Alibaba validates the argument by global investment banks including Goldman Sachs that foreign interest in Chinese stocks has been recovering across the board after years of retreats amid a regulatory crackdown on the tech sector and an economic slowdown. A benchmark of China’s yuan-denominated stocks rose to a decade high last month, and Chinese tech stocks trading in Hong Kong have been on a roll amid Beijing’s determination to reverse slowing growth and ramp up tech innovation.
Known for her prowess in stock picks, particularly in the tech sector, Wood, 69, first invested in Alibaba in 2014, shortly after it began trading in the US. No investment records could be found after September 2021, when China’s large tech companies were thrust into a government effort to curb the sector’s unfettered expansion.
Alibaba’s shares also rose on Wednesday on a plan to boost its capital expenditures on AI infrastructure from the original 380 billion yuan (US$53 billion) promised over the next three years. It was disclosed by CEO Eddie Wu Yongming at a conference on the same day, without saying how much the outlay would rise to.
The e-commerce giant aimed to build its cloud unit into “the world’s leading full-stack AI service provider” from computing power to models, said Wu, also the chairman of Alibaba Cloud, at the Apsara Conference in Hangzhou, in China’s eastern Zhejiang province.
“This is our future and the future of Alibaba,” he said. “AI intelligence has increased from a high school student level to a state-of-the-art level. The AI industry is the fastest way to track users. We believe that the penetration rate will exceed all historical figures.”

Alibaba’s ADRs have surged 92 per cent this year, while its Hong Kong shares have jumped 111 per cent. Momentum increased this month after the company’s quarterly report showed an acceleration of its cloud computing business and initial success in instant commerce, a newly launched on-demand food delivery segment that rivals Meituan.
“Alibaba has multiple growth drivers for the years ahead, with its core marketplace a strong cash cow that enjoys secular growth momentum amid the consumption upgrade in China, thanks to solid execution and technological strength in digitalising the retail sector with enhanced efficiencies,” Jefferies said in a report on Tuesday. “In cloud computing, Alibaba has clear market leadership as the backbone of digitalisation across different industries.”
Wood’s comeback to Alibaba contrasts with the recent withdrawal by Warren Buffett’s Berkshire Hathaway from BYD after 17 years of investment, with the Chinese electric-vehicle maker mired in a price war and falling profits.
Wood’s Ark Investment Management has 16 funds with a combined US$29.1 billion of assets under management, according to Bloomberg data. Ark Fintech Innovation ETF, which has US$1.5 billion in assets, has returned 52 per cent this year, while the US$2.6 billion Ark Next Generation Internet ETF has gained 58 per cent – both beating the 14 per cent advance in the S&P 500 index.
The two funds’ biggest holdings include Tesla, Canadian commerce platform Shopify and US consumer electronics company Roku, according to their holdings reports.