Alibaba shares rose over 3.8% in pre-market trading on Wednesday. The jump followed reports that Chinese regulators intend to end aggressive price wars within the food delivery sector.
State media and the State Administration for Market Regulation called for a halt to the vicious cycle of companies losing money to capture market share. This move suggests official endorsement for a more stable competitive environment and improved profitability.
The news triggered a broad rally among Chinese tech stocks. Competitor Meituan saw significant gains in Hong Kong trading as investors anticipated better margins across the industry.
The regulatory shift supports Alibaba’s rebranded food delivery service, Taobao Instant Commerce. The unit has recently shifted its strategy toward higher-value orders to improve its economic performance.