Alibaba Shares Fall Below IPO Price
On Monday, the shares of Alibaba Group Holding Ltd. (NYSE: BABA) declined to an all-time low, falling below the tech giant’s IPO price. This came on the same day that the markets crashed in China which has been referred to as the ‘Black Monday’ of China. In the early hours of morning trade, the Shanghai Composite Index declined 8.5% and when the markets then opened in the United States, the shares of Alibaba declined to $58.95 per share while the S&P 500 index (SPX) sank into a correction. In September 2014, Alibaba made their initial public offering and at the time that the Chinese e-commerce giant made its Wall Street debut, the opening price per share was at $68. Monday saw a 13.54% decline from this price and by the close of the trading day, Alibaba shares were trading at $68.18 a share on the New York Stock Exchange. When Alibaba went public last year, this was marked as the largest public offering price for a company listed in the U.S. Interestingly, the peak price for the stock reached $120 and this was viewed by analysts as undervalued. Since last year though and specifically this quarter, Alibaba’s stock has suffered and by Friday last week, shares were trading at $68.30 each. To top it off, many investors are now shifting away from Alibaba and according to regulatory filings; it was recently revealed that Soros Fund Management LLC, the fund of billionaire financier George Soros, had sold its majority stake in Alibaba.
In U.S. trading on Monday, stocks traded lower after a volatile trading session which saw the Dow Jones Industrial Average (DJIA) decline by more than 1,000 points in the opening minutes of the session. During the day, the DJIA recovered most of its losses but by the final bell, the blue chip index closed lower to record it biggest drop in 4 years. To top it off, the S&P 500 index (SPX) was also on the downside declining into correction territory. This came after the benchmark index fell by more than 10 percent from its peak reached on the 21st of May. Monday’s trading session also saw the largest volume of shares traded since August 2011 and nearly 14 billion shares changed hands on the day. At the close of trading, the DJIA dropped 3.6%, or 588.47 points, to 15,871.28, marking the lowest settlement since February 2014. Also on the downside was the SPX which declined 3.9%, or 77.68 points, to 1,893.21, which also marked the lowest level since October last year. Year to date, the S&P 500 is down 8 percent. Following the downward trend was the tech heavy Nasdaq Composite index (COMP) which declined 3.8%, or 179.79 points, to 4,526.25.
In currency trading on Monday, the U.S. dollar (USD) declined by more than 1 percent to hit an 8-month low. This came after a broad based selloff in global equity and commodity markets which was prompted by investor concerns regarding the economic slowdown in China. The EUR/USD traded at 1.1710, up 1.73% while the USD/JPY traded at 118.75, down 2.72%, marking a 3-month low. Against the currencies in New Zealand, Britain and Switzerland, the greenback traded mixed with NZD/USD down 2.59% at 0.6510, with GBP/USD up 0.41% at 1.5758 and with USD/CHF down 1.32% and trading at 0.9341. Also, the AUD/USD declined 1.35% to a 6 year low, trading at 0.7212 while the U.S. dollar index traded at 93.47, down 1.43%. This marked the index’s lowest level since January this year.
In early Asian trading on Tuesday, crude oil prices moved higher. While the main focus is currently on China, with the combination of lower oil prices as well as a decline in the U.S. dollar (USD), investors view this as a good buying opportunity of the commodity. WTI crude oil for delivery in October traded at $38.38 a barrel, up 0.35%, on the New York Mercantile Exchange. Attention has also now shifted to the American Petroleum Institute which is expected to release data today on the stockpiles in the U.S. of crude and refined products as of last week. Meanwhile, Brent crude oil for delivery in October traded at $42.62, down 6.24%, or $2.85, on the Intercontinental Exchange (ICE) in London. The current spread between the U.S. and the international benchmark for crude stands at $4.46.