Alibaba continues to be one of the biggest beneficiaries of the pandemic. Sales beat expectations and net profit rose 56 per cent in the fourth quarter of 2020. Yet growth at China’s largest ecommerce group is under threat, as Beijing’s regulatory crackdown continues.

Sales rose 37 per cent as changing consumer buying habits boosted demand for online shopping. But the pace of sales growth has been slowing. For most quarters in the past five years it was more than 50 per cent.

More concerning is the potential damage from antitrust probes. The main focus of investigations has centred on ecommerce and fintech sectors — both Alibaba’s core businesses. A massive regulator-led overhaul is under way at its digital payments affiliate Ant Group.

Alibaba is far more exposed to regulatory risks than other local tech giants such as Tencent and JD.com, which are less invested in the financial sector. Shutting down related services deemed problematic by Beijing would not leave a lasting mark on their top line.

Moreover, unlike companies such as Tencent that can diversify sales and regulatory risks geographically by selling games globally, Alibaba’s focus is on China.

For Alibaba, a return to previous growth rates — whether it be through new technology, marketing or pricing — cannot be achieved without government support. That is looking increasingly in doubt. Alibaba Group founder Jack Ma was left off a state media list of Chinese entrepreneurial leaders, in a telling reflection of Beijing’s tone towards the group.

The outlook is bleak. As antitrust controls give smaller rivals a cut of Alibaba’s nearly 60 per cent stronghold of the local ecommerce market, costs are set to rise for Alibaba. It needs to spend more on marketing to retain customers. Other costs, such as lobbying, are increasing too.

While Hong Kong-listed shares have gained 24 per cent from a December low, they trade near historic lows at 24 times forward earnings. Mr Ma’s reappearance, coupled with overflowing liquidity in the stock markets, means shares will stay on an upward trajectory. Yet Mr Ma’s return cannot guarantee strong returns. The days of unchecked growth are likely over.

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