Chinese tech lower on margin fears, surging e-commerce competition

Yahoo Finance’s Ines Ferre joins the Live show to discuss the downturn across Chinese tech stocks.

Video transcript

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- Chinese tech stocks seeing a route as investors worry squeezed margins on surging e-commerce competition will hurt these companies. Joining us with more, "Yahoo Finance's" Ines Ferre. Hi, Ines. What are we seeing in these stocks?

INES FERRE: Yeah. We are seeing a downturn when it comes to jd.com, Pinduoduo, Alibaba as well, and part of this has to do with a report, a media report, saying that jd.com is planning a subsidy campaign of $1.5 billion to better compete with the likes of Pinduoduo, a budget shopping app.

And Pinduoduo actually launched its own subsidy back in 2019, and it was able to secure the market in smaller rural towns where price sensitivity is higher there. So what this is basically saying, according to one strategist analyst is saying that if jd.com goes down this subsidy route, then it is basically a sign that jd.com is facing market share pressure when it comes to Pinduoduo.

So we've seen Baba also being dragged down because of this. But if we take a look at Chinese stocks overall, I'm just going to pull up the Hong Kong Hang Seng Index here. You can see that year-to-date, we saw a peak here back in late January. But over the last three weeks, we have seen a downturn when it comes to Chinese stocks.

And some analysts are saying, look, if you didn't buy before into this rally, then you just missed the boat. Other analysts are saying-- like, for example, Goldman Sachs strategists-- they're saying that they're expecting China stocks to increase another 24% by year end simply because you are going from a reopening to a recovery in the Chinese economy, and also because the government is expected to launch more pro-growth policies, guys.

- All right. "Yahoo Finance's" own Ines Ferre continuing to track some of the Asia-Pacific components out there. Thanks so much. Appreciate it.