Alibaba, one of China’s largest technology companies, saw its stock valuation drop after it announced a donation was made in line with the “common prosperity” agenda being promoted by Beijing. To investors, the decision inspired some worry about more Chinese regulations aimed at some of the country’s largest tech titans.

After Alibaba announced that it would be making a large $15.5 billion donation, its shares on the Hang Seng Tech Index in Hong Kong fell by 3.6%, closing out the day at $171.12. Castor Pang, head of research at Core Pacific Yamaichi International H.K. Ltd. told Bloomberg that Alibaba's donation was a "big deal" and the company's future earnings growth could see a drop into a less valuable asset class. He added that this sentiment was affecting the whole of the Chinese tech sector.

Alibaba released a statement alongside its donation announcement on Thursday from its Chief Executive Officer Daniel Zhang. In it, Zhang said his company was a beneficiary of China’s “ strong social and economic progress” and that it was eager to do its part to give back.

“We are eager to do our part to support the realization of common prosperity through high-quality development,” Zhang said.

The definition of patriotism has changed under President Xi Jinping The definition of patriotism has changed under President Xi Jinping Photo: AFP / Anthony WALLACE

This “common prosperity” agenda has picked up steam since China’s Communist Party declared that it will "regulate excessively high incomes and encourage high-income groups and enterprises to return more to society" during an Aug. 17 meeting held by Central Financial and Economic Affairs Commission. The body is chaired by President Xi Jinping, who at the meeting said the government would seek to “adjust excessive incomes” in an ostensible bid to reduce income inequality inside China.

Since Xi’s pledge, Beijing has undergone an aggressive regulatory drive with new rules on data and cybersecurity, foreign ownership, and foreign stock market listings. This has ripped through almost half a trillion dollars in value for investors in China’s tech-heavy stock indices. It has even prompted some investors to think of alternative places to park their money outside of the world’s second-largest economy.

Alibaba, itself the subject of a Chinese anti-monopoly probe, says its multibillion-dollar donation will be distributed across several years and it is not alone among the tech giants who are announcing drives to meet the common prosperity agenda. Gaming company Tencent said it would donate $7.7 billion to promote the policy and Zhang Yiming, founder of TikTok developer ByteDance, is giving $77.3 million of his own money to create an education fund. Other company founders that are donating include Pinduoduo, Meituan, and Xiaomi.