Prosus has decided you can have too much of a good thing. The Dutch ecommerce group plans to sell part of its $134bn stake in Chinese internet company Tencent in order to buy back its own shares. The sale revokes an earlier pledge to hold on to the stake.

Prosus is controlled by Naspers, South Africa’s answer to Japanese tech conglomerate SoftBank. Naspers garnered an early mover reputation in Chinese tech, buying a large stake in Tencent nearly two decades ago for just $32mn.

One unfortunate effect of Tencent’s success since then is Prosus’s steep — over 50 per cent — discount to net asset value. Before Monday’s rally, its stake in Tencent exceeded the market value of Prosus itself.

Given this, raising funds for a buyback makes sense. Prosus reported a decline in core headline earnings of a fifth in the year to March on Monday. Markets have cheered the repurchase news. Prosus shares jumped 15 per cent and Naspers 20 per cent. Prosus has also sold almost $4bn worth of stock in JD.com, which it has received as dividends from Tencent.

But the timing could have been better. There were plenty of missed opportunities to sell Tencent at higher prices last year. Shares of Tencent have halved from their peak as China’s largest social media company was subject to local regulatory scrutiny.

This scrutiny continues. China’s gaming regulator has granted publishing licences to 60 games. Conspicuously missing were approvals for Tencent. Reassuring messages given to investors should be ignored. At 26 times forward earnings, Tencent shares remain at a 90 per cent premium to global social media groups such as Meta.

Prosus’s portfolio exposure to Tencent is high, at about three-quarters of net asset value as of the end of March. Even after the plunge in Tencent shares, investors have better choices available. Prosus should keep on reducing its heavy exposure.

Shares in China’s most valuable artificial intelligence company SenseTime plunged more than 50 per cent in Hong Kong as its lock-up period expired and some pre-initial public offering investors withdrew their profits following a March rebound.

SenseTime was forced to postpone its initial public offering when the US put it on an investment blacklist over its alleged links to the Chinese military. With state backing, it revived the share float plan and raised about $740mn in Hong Kong in December.

The company’s shares fell as low as HK$2.90 (US$0.37) in the morning trading session on Thursday, their lowest-ever level and well below the listing price of HK$3.85. A lock-up on a portion of the company’s stock owned by cornerstone investors and shareholders expired on Wednesday.

Chinese tech equities dropped this week as some investors started selling their shares after a rebound from lows in mid-March. Naspers, the prominent Tencent backer, said it would further cut its stake in the Chinese tech group this week as it seeks to finance a buyback to bolster its struggling share price.

“Today’s [SenseTime] selling appears to be purely a function of the lock up expiry,” said Brian Freitas, an analyst with Periscope Analytics. “China tech is down a lot over the last six months and the pre-IPO investors and cornerstone investors are just trying to exit their positions.”

But the dumping risk is higher for companies such as SenseTime, whose shares US investors are barred from owning because of the blacklist, said Freitas. “The shareholder base is not as broad as it would be for other stocks.”

Some state investors dumped their holdings in the company after coming under pressure to not record a loss on state-backed positions, an investor familiar with the situation said. A loss on state assets can impact the career and political prospects of executives in China.

SenseTime counts state-backed Mixed-Ownership Reform Fund and Shanghai local government fund Xuhui Capital among its largest cornerstone investors.

SenseTime said in a statement that its management team had confidence in its long-term value and prospects, while a few of the company’s founding figures decided to extend the lock-up period of their holdings until the end of the year.

Yet the selling pressure could persist, with another block of shares owned by SenseTime’s shareholders to expire by December 29, according to company filings.

The crackdown on Chinese tech groups is not over yet. A fresh round of regulatory fines for Alibaba and Tencent marks the end of a shortlived relief rally.

The regulator has targeted the two groups for not properly disclosing past deals and failing to comply with anti-monopoly rules. Of 28 deals it says violated regulations, Tencent was involved in 12 and Alibaba five.

A 6 per cent drop for Alibaba’s share price may seem an overreaction given the size of the fines. The maximum for each case is just Rmb500,000 (slightly less than $75,000).

But the fact that the fines cover past transactions is troubling. There is a risk that regulators will reach even further back. This would have an outsized impact on Alibaba and Tencent. Between them, they accounted for nearly half of all venture capital flow for acquisitions in mainland China before the crackdown.

The next hurdle comes in August when Beijing is expected to implement a revised anti-monopoly law. The draft includes terms that demand companies seek an antitrust review before any planned mergers or acquisitions if any of the parties’ annual global sales exceed Rmb12bn ($1.79bn) and at least two parties’ domestic annual sales reach Rmb800mn. Large merger and acquisition deals in China face significant hurdles.

Alibaba and Tencent shares have gained more than 15 per cent from a March low. As antitrust scrutiny grows there is reason to expect those gains to evaporate.

There is one potential bright spot. Following a 90 per cent collapse in Chinese venture funding in the first five months of the year, deals are finally starting to pick up. Qiming Venture Partners, an early backer of ByteDance, has raised $3.2bn. Sequoia China has secured $9bn in fresh capital.

While dwindling acquisitions could cut valuations across China’s tech sector, the antitrust crackdowns could also mean more opportunities for start-ups to expand their businesses in areas once dominated by local giants.

China’s search engine giant Baidu is racing ahead. On Thursday it unveiled a new autonomous vehicle that it claims can drive just as well as a skilled human with more than 20 years of experience. Its $37,000 price is about half that of the previous model.

The new car will supposedly need no human intervention. It has autonomous Level 4 capabilities — two levels more advanced than the technology in widespread use. It will become available on Baidu’s ride-hailing service next year.

Robotaxi rides could cut the cost of taking a taxi in half, the company says. That low price point means the vehicles and fares are unlikely to become significant profit drivers. Nonetheless, Baidu is getting a valuable head-start.

The technology in use demands huge amounts of data to refine algorithms. The more passengers and miles robotaxis notch up, the more advanced the software will be. Official support — Beijing plans to have Level 3 vehicles in mass production by 2025 — will help.

Growing investment in China’s autonomous driving sector by foreign investors, including German engineering company Bosch and Japanese automaker Nissan, reflect potential in the market and its advanced state compared with other countries.

The first companies to develop fully autonomous driving software systems are betting on the idea that they will be able to sell the systems around the world. The artificial intelligence and cloud computing needed is expected to more than double the size of the automotive software market to more than $40bn in the next five years.

For Baidu, securing a lead is crucial. Growth in its largest source of revenue — online marketing — slowed for a two straight quarters last year. Operating margins of 8 per cent last year are nearly half those of two years ago. But even as first-quarter group operating income fell, its intelligent driving and cloud businesses grew 45 per cent compared with the previous year.

Sustained growth in that unit would help shares, which are down a fifth in the past year, to stage a convincing rebound.

Sales of international renminbi bonds have surged this year as the country’s fixed income investors, starved of decent returns at home, take advantage of new market access to snap up higher-yielding Chinese currency debt offshore.

The volume of dim sum bond offerings — renminbi-denominated debt sold in Hong Kong — has risen 145 per cent from a year ago to Rmb126.8bn ($19.3bn), already surpassing the full-year total of 2021, according to data from Refinitiv. That puts the market on track for its best year since 2016.

The revival of Hong Kong’s long-stagnant dim sum market stands in sharp contrast to negative sentiment in China’s market for onshore renminbi debt, which foreign investors have been dumping at a record pace in favour of higher yielding dollar debt.

“The pick up in issuance [of dim sum bonds] is real,” said Becky Liu, head of China macro strategy at Standard Chartered.

On the demand side, Liu said mainland Chinese investors were taking advantage of the Southbound Bond Connect scheme, which launched late last year and allows China’s domestic financial institutions to access bonds traded in Hong Kong.



That includes dim sum notes, which offer a yield premium compared with China’s domestic fixed-income market, in which easing measures to combat an economic slowdown have depressed bond yields.

And while international investors are swapping their holdings of renminbi bonds for dollar debt, China’s capital controls leave its domestic bond traders with far fewer options, making the dim sum market an attractive source of juicier returns.

Meanwhile, a series of sharp rate rises by the US Federal Reserve has pushed dollar bond yields above those on equivalent dim sum debt, incentivising more foreign financial groups to raise renminbi funding in Hong Kong that can be used for trade financing and other purposes.

“One of the previous hurdles for getting renminbi for invoicing to support trade financing and other uses was high interest rates but that story has now flipped — the cost of renminbi financing is cheaper than for the dollar,” Liu said.



That increase in offshore renminbi fundraising also comes alongside signs of an uptick in trade deals settled in renminbi. In June, India’s largest cement producer UltraTech adopted China’s currency to pay for imports of Russian coal.

“The dollar is still the dominant currency of global trade but we do have a number of examples pointing to a potential rise in renminbi-denominated trade settlement,” Liu said.

And while most dim sum bond sales this year have come from the international arms of China’s largest banks and financial institutions, Refinitiv data show foreign issuers accounts for roughly a fifth of total fundraising.

Policy banks from countries including Germany, South Korea and Sweden as well as the World Bank have all tapped the market this year, as have lenders from commodities exporters to China, such as National Australia Bank and Malaysia’s Maybank. A handful of corporates have sold dim sum bonds, including Hong Kong property group Wheelock.

China’s finance ministry has also signalled high-level support for the market’s growth with the sale of Rmb7.5bn in offshore bonds in three tranches last month and has announced plans to tap the market for a record fourth time later in the year.

Investors said the Southbound Bond Connect programme had also spurred more interest among Chinese issuers in selling offshore renminbi debt, with property developer China Vanke raising Rmb500mn from a dim sum deal last month.

“Mainland companies who issue offshore bonds on a regular basis now find it’s cheaper to issue dim sum bonds than dollar bonds,” said a senior fixed-income investment manager with a foreign lender based in Shanghai. “And it’s natural for [Chinese] investors to seek assets with higher yields in the offshore markets.”

But he added that Chinese financial institutions were still required to flag any planned purchases or sales through the bond connect to the country’s central bank and foreign exchange regulator days in advance. The precautions are part of a regulatory hangover from 2016, when a renminbi rout forced Beijing to impose strict capital controls.

“Outflows are still closely watched by the PBoC and the State Administration of Foreign Exchange,” the investment manager said, referring to the central bank, the People’s Bank of China. “They don’t want any added volatility.”

Melco Resorts & Entertainment, a $2.5bn casino group run by Hong Kong casino mogul Lawrence Ho, is weighing relocating its headquarters to Macau to avoid being delisted in the US, according to two people familiar with the matter.

The US Securities and Exchange Commission has said that about 200 Chinese and Hong Kong companies listed in New York will be forced to delist in 2024 if they do not comply with audit disclosure laws. Macau, a special administrative region of China, is not included in the delisting threat, opening the door to a potential loophole.

“There are a few companies thinking this through right now, but the word is until the man upstairs opines, no one will make the move,” said one of the people close to the company, referring to Chinese president Xi Jinping.

China has long prevented companies and auditors from disclosing audit details to foreign regulators over national security concerns. It is not clear if Beijing would permit foreign regulators to examine the audit files of companies based in Macau.

After the introduction of the Holding Foreign Companies Accountable Act in 2020, regulators can prohibit foreign companies from being traded in the US if the Public Company Accounting Oversight Board — the audit watchdog — is unable to inspect audits for three consecutive years.

In 2021, the PCAOB said China and Hong Kong were not in compliance, giving companies from those jurisdictions until 2024 to comply or be delisted in the US.

Macau-based companies audited by accounting firms outside China or Hong Kong could in theory continue trading because the PCAOB has not found the region in breach of the rules, according to a person close to the regulator.

To avoid being delisted, Melco would have to change its auditor to one based in the US that is able to be inspected by the PCAOB, one of the people close to the company said. Melco has been audited by the Hong Kong office of EY since 2017.

Melco did not comment following repeated requests.

The group, whose parent company has operated from Hong Kong since 1910, is one of six companies licensed to manage casinos in Macau, a gambling hub.

Its properties include the City of Dreams resort and casino in Macau, which includes the Morpheus Hotel designed by Zaha Hadid Architects. It raised $1.1bn when it listed on Nasdaq in 2006. Its parent company, Melco International, listed in Hong Kong in 1927.

Lawrence Ho, whose father Stanley held a monopoly on gambling in Macau for decades, took over Melco International in 2001 after a career in investment banking. He launched the subsidiary Melco Resorts in 2004.

The group’s shares have lost more than half their value this year after being pummelled by the threat of being delisted from Nasdaq and Beijing’s strict zero-Covid strategy.

Negotiations between the US and China on access to the audit files of Chinese groups listed in the US have reached a stalemate.

In April, China modified a decade-long rule that restricted the data-sharing practices of overseas companies in a concession to the US. However, it has not agreed to comply with Washington’s demand for access to full audits.

Additional reporting by Hudson Lockett in Hong Kong

SoftBank has raised as much as $22bn in cash from deals that would sharply reduce its stake in Alibaba over the coming years, as the Japanese investor responds to a market downturn that has ravaged its technology portfolio.

The group, led by billionaire founder Masayoshi Son, has this year carried out the sale of about one-third of its Alibaba stake through prepaid forward contracts — a type of derivative to which SoftBank has increasingly turned to raise cash immediately while retaining the possibility of holding on to the shares.

SoftBank has now sold more than half its Alibaba holdings through these forward sales. That could shrink its stake in the Chinese ecommerce giant below the threshold for retaining its board seat and prevent the Japanese group from recognising its share of Alibaba’s income in its financial statements.

If SoftBank opts against buying back the Alibaba shares, it would mark the end of an era. Son built his fortune on the back of leading a $20mn funding round for Jack Ma’s fledgling ecommerce start-up more than two decades ago, generating a huge return on investment.

“At one point Alibaba made Jack Ma the richest man in China and Masa the richest in Japan — it’s enabled all of his subsequent investing adventures,” said Duncan Clark, chair of Beijing-based tech consultancy BDA China. “If [Son’s] selling it down now, it shows his mindset toward China and the pressure he’s under.”

SoftBank has scrambled to raise cash this year as dozens of its Vision Fund investments have slumped amid a broader market sell-off in tech stocks. Son promised investors he would play “defence” in May after unveiling a $27bn investment loss for the Vision Fund during the previous business year.



Redex Research analyst Kirk Boodry estimated that losses continued to pile up in the quarter to the end of June, adding scrutiny to SoftBank’s high level of standalone debt, which he said nearly doubled over the past 18 months to ¥12.1tn ($92bn) at the end of March. Its cash position stood at ¥2.9tn.

SoftBank stressed it retained the right to buy back the Alibaba shares, but added the transactions allowed the group to “raise capital upfront” while “hedging against share downside”.

The Japanese group also said it had cut back on new investments and was focused on “increasing our cash position amid this uncertain market environment”. It has employed similar financing using its holdings in T-Mobile and Deutsche Telekom.

Daniel Taylor, a corporate finance expert at the Wharton School of the University of Pennsylvania said that few had noticed the sales as “the disclosures are hard to get”. But the result could be that the market will be flooded with Alibaba shares as the deals come due over the next couple of years.





The forward sales of 213mn Alibaba shares this year were struck with banks such as Goldman Sachs, Mizuho and UBS, and in most cases delayed the final handover of shares for two years, according to the filings seen by the Financial Times.

The Japanese group retains the shares’ voting rights until maturity and has the option to settle the contracts with cash instead of shares. Some of the deals set minimum or maximum share prices to settle the transactions.

SoftBank has since October turned over 40mn Alibaba shares to settle deals struck in previous periods, reducing its stake in the company from 24.8 per cent to 23.9 per cent in mid-July.

The record pace of forward sales this year, involving more shares than in the previous three years combined, means SoftBank may have leveraged more than 80 per cent of its Alibaba holdings in the derivative deals or the pledging of shares as collateral for margin loans, according to the FT’s estimates.

“Alibaba is their only liquid asset, they don’t have any other large liquid assets,” said Atul Goyal, an analyst at Jefferies. “They’ve already sold SoftBank Corp, which is a subsidiary, [down] to 40 per cent so any further cut will remove it as a subsidiary.”



But Son is cashing out a large portion of his Alibaba stake at multiyear lows. SoftBank in April, for instance, sold 50mn shares at prices slightly higher than where the Chinese group’s shares closed on its first day of trading in 2014, according to the filings provided by data company The Washington Service.

SoftBank had separately pledged 164mn Alibaba shares as collateral for $6bn of loans at the end of March. The group has been forced to repay billions of dollars in borrowings collateralised by the share block as Alibaba’s share price has cratered over the past two years, filings show.

The Alibaba selldown is part of SoftBank’s effort to diversify its holdings, with the Chinese group representing just 23 per cent of its total value at the end of March, down from 60 per cent in 2020. During this period SoftBank raised $30bn from the forward sales of Alibaba, layering the expansion of its portfolio on top of complex financial engineering.

A chunk of the harvested cash was funnelled into the group’s second Vision Fund, which failed to attract outside money.

The fund had invested $48bn into 250 companies by the end of March. Most of the companies remain private and Son has leveraged the portfolio for more than $5bn in loans.

In June, a shareholder asked Son if any company among the 475 in SoftBank’s stable would outshine Alibaba in the years to come.

“Maybe one or two. If it goes well, three,” he said. “But one or two, if they become such a success, then that’s going to give us a return for everything.”

Antoni Slodkowski and Robert Smith contributed reporting

This story has been amended to clarify SoftBank’s cash position

Baidu has secured a permit to operate China’s first-ever fully driverless licensed robotaxis, winning an early lead in the race to launch autonomous cars in the country.

The internet group said on Monday it would be able to operate its Apollo Go cars without a safety supervisor on board in the Chinese cities of Wuhan and Chongqing.

Winning the permit has given Baidu, the operator of China’s largest search engine, an edge over its rivals, including Pony.ai, WeRide and AutoX, which are racing to develop fully autonomous driving software systems.

The permit would allow the company to carry out more testing of its vehicles, said Charlie Chai, autonomous driving analyst at Shanghai-based 86 Research.

“My best guess is that commercialisation generating significant revenue is still two to three years away,” he said. “Tech-wise, the leaders are Pony.ai and [Baidu’s] Apollo, but in terms of scale and on-ground testing, deployment Baidu is ahead.”

The service will be available in the central city of Wuhan from 9am to 5pm, and the south-western Chongqing municipality from 9.30am to 4.30pm, with five robotaxis deployed in each city, said the company. The designated areas of service will cover 13 sq km in Wuhan and 30 sq km in Chongqing.

In April, Baidu and Pony.ai won approval to move the safety driver from behind the wheel to the front passenger seat for part of their robotaxi businesses in Beijing. Beijing regulators in July allowed the two companies to collect fees for driverless rides within a 60 sq km suburban zone of the capital city.

Baidu struggled in the first quarter, with its search and video streaming platforms — traditionally the company’s cash cows — experiencing flat growth as the Chinese economy slowed. The company is banking on the driverless car business to shore up revenues in the future.

Baidu reported an Rmb885mn ($131mn) net loss for the first three months of the year, compared with the previous year’s profit of Rmb25.65bn, with research and development expenses increasing 10 per cent year on year.

But Chai said the longer timeline for the commercialisation of autonomous driving was a dilemma for shareholders.

Search and growth at IQIYI, the streaming platform in which Baidu holds a controlling stake, were weak this year, he said. “The company lacks a good narrative . . . it only attracts patient investors who are willing to wait,” said Chai.

Baidu’s chief executive Robin Li said the company’s business had been hit by the resurgence of Covid-19 in China since mid-March, but he remained confident that its artificial intelligence businesses could boost the long-term growth of the internet group.

Self-driving vehicles have become a new arena of US-China competition, according to analysts.

“China and the US are racing from the same starting line now,” said Owen Chen, an analyst with S&P Global Mobility. “It is not only technological competition between companies but also competition between countries and regional governments when it comes to policy support for the industry.”

Tencent has reported its first decline in quarterly revenues, with China’s most valuable company shaken by the country’s slowing economy and a regulatory crackdown.

The tech group missed analysts’ sales expectations after posting quarterly revenue of Rmb134bn in the three months to June 30, down 3 per cent from the same period last year and below forecasts of Rmb135.6bn.

Tencent’s net profit also fell to Rmb18.6bn (US$2.7bn), down from Rmb43bn in the second quarter of 2021, and missing analyst estimates of Rmb25bn.

The group has responded to the pressures on its business by slashing staff numbers, saying it had “optimised our workforce” in a cost-cutting drive that has reduced expenses.

“During the second quarter, we actively exited non-core businesses, tightened our marketing spending and trimmed operating expenses,” Pony Ma, Tencent’s chair, said on Wednesday.

“Looking forward, we will focus on enhancing the efficiency of our businesses and launching new revenue initiatives.”



The slowing Chinese economy has hurt the company’s quarterly advertising revenue, which dropped by 18 per cent on the year before.

Tencent has also been hit with a regulatory clampdown on gaming that began last year, with the government slowing approvals and restricting children to about three hours of play a week.

Chinese regulators paused approvals for new games in July last year as they sought to align the industry with Communist party values and make games less addictive. While it restarted gaming approvals in April, Beijing is yet to publicly sign off on any from Tencent.

“The domestic game industry is facing transitional challenges including fewer big game releases, lower user spending and measures to protect minors,” the company said.

As it contemplates obstacles closer to home, Tencent has been looking to expand abroad and has increased its investment in foreign start-ups.

On Wednesday, however, the group reported that revenue from its international gaming segment fell by 1 per cent in the quarter, blaming the desire of people to seek experiences in the real world following global lockdowns.

“The international games market is experiencing a post-pandemic digestion period as players resume offline activities,” Tencent said.

Amid a wave of tech industry redundancies in China this year, the company lost nearly 5 per cent of its staff in the quarter, trimming its employee count to 110,715 staff.

Youth unemployment soared to a record 19.9 per cent across the country in July.

Disappointing July economic figures revealed how Beijing was facing a decline in consumer demand after intermittent lockdowns to maintain its zero-Covid policy, as well as battling the fallout from debt-laden property developers and slowing global growth.

SoftBank sold a large part of its stake in Alibaba to “instantly show” investors its finances were solid after logging a record quarterly loss of $23bn, the technology conglomerate’s chief financial officer has said.

In an interview with the Financial Times, Yoshimitsu Goto acknowledged that after years of playing down the possibility of any sudden, large-scale exit from its stake in the Chinese ecommerce giant, SoftBank’s announcement of the sale last week was abrupt.

Goto dismissed market concerns that SoftBank’s continued heavy losses could strain its relationship with lenders, but admitted that the Alibaba share sale was intended to reassure investors in what is one of Japan’s most highly leveraged companies.

“In times like this, it is critical as an investment group to instantly show that our financial strength is rock solid,” Goto said.

The Alibaba stake sale, which was accompanied by what some investors said was inadequate explanation from SoftBank, prompted some to question whether it was actually a move to address a looming financial emergency.

Only two days after reporting its worst quarterly performance, SoftBank revealed that it would post a gain of ¥4.6tn ($33.6bn) by selling shares in Alibaba, significantly reducing the investment on which founder Masayoshi Son built his name as one of the world’s greatest technology investors.

Goto said the move was designed to mirror the previous sale of some of SoftBank’s most prized holdings which began when the Covid-19 pandemic led to a crash in its share price in March 2020; that included stakes in its domestic mobile unit and US carrier T-Mobile.

“Just like two years and a half ago, we wanted to show the world that we can do something like this because we are financially resilient. That was our objective,” he said.

Although the sale served the need to shore up the company’s balance sheet, the decision to sharply reduce the Alibaba stake comes with the political risk of being seen to abandon a Chinese investment at a sensitive time. China is in the throes of a regulatory crackdown on tech companies and diplomatic relations between Beijing and Tokyo are strained.

In 2020, SoftBank’s $41bn asset sale funded the largest share buyback in Japanese history and paid down its enormous debt load, helping to improve investor confidence. The latest move to sell Alibaba’s stake has boosted the group’s share price by 10 per cent, but also left some analysts perplexed.

“SoftBank is reducing exposure to its largest asset when [Alibaba’s] shares are down 71 per cent from their peak. It is a far different message than the super-positive one we have become used to hearing over the years,” said Kirk Boodry, analyst at Redex Research.

The sale of the Alibaba stake is being carried out through prepaid forward contracts, a type of derivative to which SoftBank has increasingly turned to raise immediate cash. Until recently, the company had stressed to investors that the contracts did not amount to a sale since it retained the option to buy back the shares later.

But its decision to settle the deals early by relinquishing the option of retaining the shares means SoftBank’s stake in Alibaba will reduce from 23.7 per cent at the end of June to 14.6 per cent when the settlement is completed in September.

Among concerns expressed by several investors and analysts following two consecutive quarters of large losses was that SoftBank risked a breach of one of its financial covenants with its lenders. The covenant states the company must not report two consecutive years of losses. SoftBank suffered a ¥1.7tn net loss in the year to March 2022.

“Our decision has nothing to do with the financial covenant. There are countless ways for us to address the covenant issue,” Goto said.

He added that the main reason for the early settlement of Alibaba contracts was to remove any concern the group would need additional cash in future to buy back the shares. “We wanted to send a clear message regarding our balance sheet,” Goto said.