Chinese online store Alibaba Group Holding is investing $3.6 billion in taking control of the Chinese hypermarket chain Sun Art Retail Group. Alibaba already owns a 21 per cent stake in the chain, which will increase to about 72 per cent thanks to the announced investment. Shares of the Chinese chain gained as much as 30 per cent after the announcement. 

This year the Covid-19 pandemic helped lift the company’s online grocery operating profit margins to an estimated 10.5 per cent in February, from about 2.5 per cent for the full year in 2019 as shoppers increased the number of items they purchased in each order

Melinda Hu at Bernstein announced: “Because of Covid, the online grocery sector as a whole has drawn a lot of capital and investment, and the smaller players who would have otherwise been squeezed out of the market have continued to survive.”

Positive message has also Ant Group which has the same owner as Alibaba. The company has received approval from Chinese regulators for the Hong Kong leg of its $30bn initial public offering. Shares in Ant, which some analysts have valued at as much as $318bn, could price ahead of the US presidential election on November 3. Ant allowed five domestic fund managers to buy up shares that they then offered to the retail trader.

Performance of Alibaba’s shares (Source: Tradingview.com)