And given how China-adverse investors have become, it may be tough to reverse that without an all-clear for the economy more broadly—especially since Alibaba executives may be tempted to slow-walk restructuring plans as long as China’s stock markets remain in the doldrums.

Alibaba’s Hong Kong-listed shares fell 3% Monday in the wake of two potentially significant developments: a report from Bloomberg, citing sources, that the firm would put on hold a potential IPO of its Freshippo grocery chain, and a surprise personnel change. Alibaba declined to comment on the Bloomberg report.

Alibaba’s leadership reshuffle, which became official Sunday, is no surprise: It has been telegraphed for months. Daniel Zhang formally stepped down as Alibaba’s chairman and chief executive officer, replaced by Brooklyn Nets owner Joe Tsai and Eddie Wu respectively.

What was unexpected was that Zhang also resigned from his separate roles as chairman and chief executive of Alibaba’s cloud business. Zhang had, as recently as June, framed his plan to resign as Alibaba chief as a means to focus squarely on the cloud business. Instead Wu, the incoming Alibaba CEO, will take over Zhang’s roles at the cloud unit too.

The knee-jerk share-price reaction reveals investors’ renewed uncertainty regarding the progress of the e-commerce giant’s restructuring plan—particularly the spinoff of its valuable cloud unit. Alibaba announced in March that it planned to split itself into six units and explore IPOs: a declaration which quickly lighted a fire under the company’s stock. The firm said it planned to fully spin off its cloud unit and distribute shares to Alibaba investors by May 2024.

Apart from its core e-commerce business, Alibaba’s cloud unit is probably its most valuable. But lately it has faced serious challenges from competitors such as Huawei and state-owned telecom companies. Losing the international business of Bytedance, TikTok’s owner, was another blow. Revenue at Alibaba’s cloud unit grew only 4% year over year in the June quarter—the slowest pace among its major segments.

The leadership tweak probably won’t derail the restructuring, which is increasingly the driver for the stock. But it also comes as persistent gloom in the Chinese economy is also clouding the company’s prospects—and driving investors away from the country’s stocks more generally.

Alibaba’s shares are up only 2% this year. Almost all of the stock’s gains in March following the restructuring announcement have been wiped out, although it is still handily outperforming the broader Hong Kong index. And that’s despite the fact that Alibaba’s business actually recovered nicely last quarter. Its revenue increased 14% year over year—the first double-digit growth since 2021.

The bearish sentiment on Chinese assets could also affect how much the market is willing to pay for Alibaba’s separate businesses—not only for the cloud unit but also, potentially, for smaller ventures like its bricks-and-mortar retail business Freshippo.

In such an environment—and given that Alibaba is still easily beating the Hong Kong market this year—it’s no surprise that any hints of potential turbulence, however small, can morph into big air pockets.

Write to Jacky Wong at jacky.wong@wsj.com