U.S.-listed shares of Chinese e-commerce companies soared on Tuesday after the country’s central bank announced its first economic stimulus package since the pandemic.
Online retail giants Alibaba (BABA), Pinduoduo (PDD) and Jingdong (JD).com (JD), some of China’s largest companies by market capitalization, led Tuesday morning’s surge. Alibaba rose 7%, Pinduoduo rose nearly 10% and Jingtocom rose about 11%.
The People’s Bank of China announced a range of financial stimulus measures in a last-ditch effort to revive the country’s struggling economy. As Yahoo Finance reporter Jared Blikre explained in Tuesday’s Morning Brief, the central bank cut key interest rates, lowered bank reserve requirements and freed up cash to increase lending.
These measures aim to make it easier for households and businesses to access loans at low interest rates, helping to stimulate spending and investment in an economy hit by weak demand and a cooling property market. These measures included in the stimulus package are expected to, among other things, free up approximately 1 trillion yuan, or more than $140 billion, of liquidity.
China’s stock market reacted positively to this news. The CSI 300 (000300.SS), Shanghai Composite Index (000001.SS), and Hang Seng Index (^HSI) all rose by more than 4%. Other Chinese tech stocks also jumped on the news, including Baidu (BIDU), NetEase (NTSE) and Tencent (0.700.HK).
Technology companies, including giants like Alibaba, have struggled in China in recent years. China’s regulatory crackdown on the industry, which began in late 2020, cost major Chinese companies in the sector a total of $1 trillion in losses as of last year.
Alibaba completed a three-year overhaul this summer following an antitrust investigation that resulted in a $2.6 billion fine from China’s antitrust regulator, making it fully compliant with China’s stricter regulations. Compliant. Despite the recent rally, Alibaba shares are up 23% since the beginning of the year, but the company’s stock price remains well below its highs of more than $300 in late 2020. The stock prices of JD.com, Pinduoduo, Tencent, and NetEase also remain well below their stock prices. High prices in early 2021.
A view of Alibaba’s headquarters campus in Shanghai, China, September 12, 2024. (Costfoto/NurPhoto via Getty Images) (NurPhoto via Getty Images)
Some experts doubt that China’s stimulus plans will be enough to strengthen the country’s economy or influence global markets.
Jeffrey Kleintop, chief global investment strategist at Charles Schwab, told Yahoo Finance that “lower mortgage rates on existing loans may help households, but they are likely to lead to declines in real estate prices, gross incomes, and employment.” It does nothing to stop it.” “This is good, but it is unclear how much of a long-term impact this will have on stock prices.”
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“We’ve heard so many times that China is going to ease, and we’re excited about the impact on the global economy, but that hasn’t materialized,” said Stephanie Ross, chief economist at Wolf Research. ” he added.
Laura Bratton is a reporter for Yahoo Finance.
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