Alibaba and Other Chinese Tech Stocks Rise as Sentiment Begins to Steady
June 15, 2022
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Alibaba ($NYSE:BABA), JD.com and several other Chinese tech stocks rose early on Tuesday as sentiment towards the sector began to steady, following a three-day bout of selling. Alibaba gained slightly more than 3% in premarket trading, while JD.com gained slightly less than 3%. On Monday, U.S. The move was welcomed by Chinese officials, who said they were committed to working with the U.S. to reach a trade agreement. The temporary truce in the trade war is good news for Chinese tech stocks, which have been under pressure in recent months on fears of a prolonged trade dispute between the world’s two largest economies. Alibaba, JD.com and other Chinese tech companies have been caught in the crossfire of the trade war, with their stocks falling sharply in value as investors worry about the impact of tariffs on their businesses. However, the recent delay in tariffs is a positive sign that the two sides are making progress in their trade negotiations, and it could help to ease some of the pressure on Chinese tech stocks in the near-term. Looking longer-term, it is still unclear how the trade war will ultimately affect Chinese tech companies. If a trade agreement is reached, the companies could see a rebound in their stock prices. However, if the trade war escalates, they could be facing headwinds in the form of higher costs and reduced demand for their products.
Market Reaction
On Tuesday, Alibaba ($NYSE:BABA) stock opened at $102.0 and closed at $105.2. This represented a 6.8% increase from the previous closing price of $98.5.
VI Analysis
The company’s fundamentals reflect its long-term potential. The following analysis of Alibaba is made simple by the VI app. The VI Star Chart shows that Alibaba is strong in profit, growth, and medium in asset and weak in dividend. Alibaba has a high health score of 8/10 considering its cash flows and debt, and is capable of sustaining future operations in times of crisis. Alibaba is classified as a ‘gorilla’, a type of company that achieved stable and high revenue or earning growth due to its strong competitive advantage. At the right price, it is suitable for those who want to invest for high capital gains. High growth companies are deemed more risky as they attempt to grow faster.
Summary
Alibaba Group Holding Ltd. Alibaba’s stock price rose 6.8% in trading Wednesday after a number of positive developments for the company. The move will help Alibaba expand its reach in Southeast Asia, where it already dominates the market. Second, Alibaba announced a partnership with Baidu (BIDU), China’s largest search engine, to jointly develop a new maps service. The partnership will help Alibaba better compete with Tencent (TCEHY), another Chinese tech giant. The new funding will help Ant Financial expand its reach in China and beyond. These positive developments sent Alibaba’s stock price soaring, and helped to improve sentiment in the Chinese tech sector more broadly. The Chinese tech sector has been under pressure in recent months due to concerns about regulation and the slowdown in the Chinese economy. But Wednesday’s news shows that there are still plenty of reasons to be bullish on Chinese tech stocks.
