China’s tech giants, led by Alibaba Group Holding, are experiencing a resurgence in the market, driven by expectations of further stimulus measures to boost the country’s economy. The company, along with its e-commerce rivals PDD Holdings, JD.com, and Baidu, saw significant gains on Friday, with Alibaba’s stock surging 37% in the last 30 days.
In September, China’s central bank announced plans to reduce the reserve requirement ratio and seven-day reverse repurchase rate to stimulate domestic spending. Additionally, the government allowed homeowners to refinance their mortgages, providing a much-needed boost to the real estate sector.
According to John Choi of Daiwa Securities, e-commerce companies are likely to be the biggest beneficiaries of further stimulus measures. China’s previous stimulus package in September restored over $3 trillion in market value to Chinese stocks, with JD.com, Baidu, and PDD Holdings also experiencing significant gains.
The upcoming holiday shopping season is expected to provide an additional tailwind for e-commerce stocks, with Alibaba allocating 40 billion yuan ($5.7 billion) in resources to tap into the Singles’ Day shopping festival on November 11.
Meanwhile, China’s electric vehicle stocks, including NIO, Li Auto, XPeng, and ZEEKR Intelligent Technology Holding, also saw gains on Friday, despite the country’s ongoing struggles with a weak economy, export reliance, and an aging population.
The 2020 pandemic had disrupted China’s semiconductor supply chains, leading to a crisis in the production of chips used in smartphones, PCs, and cars. The regulatory crackdown on Chinese hyperscalars in the same year had further added to the woes, with Alibaba’s fintech affiliate Ant Group being forced to cancel its initial public offering.
However, China’s recent signals of ending its regulatory crackdown on hyperscalars have provided a glimmer of hope for the industry. The country’s efforts to consolidate its semiconductor positions and reduce its reliance on foreign suppliers are also expected to provide a boost to the sector.
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