News of 'Ma' arrest in China makes Alibaba investors dump $27 billion

Alibaba shares fell as much as 9 per cent on Tuesday after a state media report that Chinese authorities had taken action against an individual surnamed Ma, but recouped losses after the report was revised to make clear it was not the company's founder.

State broadcaster CCTV first reported that authorities in the city of Hangzhou, Alibaba's headquarters, had taken action against an individual surnamed Ma, whose name consisted of two Chinese characters, suspected of using the internet to engage in activities endangering national security.

Investors quickly dumped their shares, causing the stock to crash by as much as 9.4 per cent, erasing about $27 billion in share value.

The broadcaster later revised the article to make clear that the individual in question had a three-character name, indicating that it was not billionaire Alibaba founder Jack Ma.

A spokesperson for Alibaba did not immediately respond to a Reuters request for comment on the media report.

Alibaba stock dropped as much as 9.4% in early trading in Hong Kong in a firmer broader market. It later pared most of its losses and was trading down 1.1% by 0310 GMT.