Yahoo Finance China Tech Stocks May Open Higher After Alibaba Revenue Beat
(Bloomberg) -- Hong Kong-listed Chinese tech stocks may get a boost after mainland firms traded in the US rallied in the wake of Alibaba Group Holding Ltd.’s better-than-expected revenue despite China’s ongoing economic woes.
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JD.com Inc. and Pinduoduo Inc. gained more than 3.2% and Baidu Inc. was up 2.5%. US-listed Alibaba shares rose for a fourth consecutive day, paring earlier gains to close 1.8% higher. The Nasdaq Golden Dragon Index advanced 2.3% in its biggest one-day climb in about a month.
“The company mentioned the business recovery in June which should help other e-commerce players like JD.com and Pinduoduo,” said Henry Guo, an analyst at M Science LLC. “Investors had low expectations on China ADRs before this print but Alibaba reports suggest likely business upsides to expectations for those companies.”
Chinese tech stocks have been through a tumultuous ride for more than a year amid regulatory crackdowns and a series of bruising lockdowns that dampened consumption, and more recently, rising geopolitical tensions. While some analysts have been optimistic about earnings results, with others holding on to their bullish calls on the nation’s stocks, traders have been offloading them with the Nasdaq Golden Dragon China Index down about 18% this year after an 11% decline in July. Still, the benchmark has climbed 41% from a March low.
READ: Alibaba Revenue Beat Puts Focus on China Tech Peers: Street Wrap
Now, Alibaba’s sales beat may be a welcome sign for investors even as the stock continues to face a litany of other headwinds, including a struggling Chinese economy and regulatory concerns from authorities in both Beijing and Washington. Last week, the company was added to the US Securities and Exchange Commission’s list of stocks that are at risk of being delisted from American exchanges. That came just days after Alibaba said it would be seeking a primary listing in Hong Kong.
“It is an encouraging start to the earnings season for China tech,” said Bloomberg Intelligence analyst Marvin Chen. “Investors will be looking for guidance that the worst is behind us, and for tech that means from an economic and regulatory perspective.”
All eyes will be on quarterly results due from other Chinese tech giants like Baidu, JD.com and Pinduoduo, which are expected to release their numbers later this month. Baidu’s shares have dropped about 6% this year, while JD.com and Pinduoduo fell 7.3% and 12.1%, respectively.
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