China Internet Stocks Soar After Alibaba BABA Results 14.79%
Group Holding Ltd. and Baidu Inc.
ahead of the market’s downward expectations.
The rally extends an unusually volatile period for the sector, which began in the US, where American deposits at both companies rose more than 10% on Thursday. That helped fuel a 7.6% gain in the broader China Golden Dragon Nasdaq Index.
The gains continued on Friday in Hong Kong, where two online giants are also listed. The 30-stock Hang Seng Tech index rose 3.8%, while the broader Hang Seng index gained 2.9%.
On Thursday, Alibaba reported a 9% higher-than-expected revenue increase for the quarter ended March, or about $32.2 billion, thanks largely to growth in its commerce business. their main e-commerce. Meanwhile, Baidu reported slightly higher quarterly revenue compared to last year. Those sales, which also narrowly beat market consensus, were supported by strong demand for the Chinese search giant’s cloud computing and artificial intelligence products. .
Sanford C. Bernstein analyst Robin Zhu and colleagues wrote in a note to clients.
Jack Siu, Credit Suisse’s chief investment officer for Greater China, said sentiment towards Chinese tech stocks is shifting and the latest results are just the impetus for the upside. Beijing has sent a clear signal, he said, that the regulatory campaign against technology giants and internet platforms will be halted.
Last week, Chinese politicians announced their stronger support for the digital economy at a meeting with select tech executives. In April, China’s Politburo – the ruling Communist Party’s top policy-making body – also announced that it would come up with policies to support the economy and promote the remedy of problems in major regions. company using internet platform.
Frank Benzimra, head of Asia equity strategy at Société Générale, said Chinese tech stocks have suffered from extremely high volatility. He said the increasingly supportive stance from Chinese officials is being offset by the strict Covid-19 restrictions, which are weighing on growth and consumer sentiment.
That means it’s too early to say that the tech sector has bottomed out, Mr. Benzimra said. “We come out of the woods when we see sustained growth in consumption and the economy,” he said.
Although Alibaba’s sales grew more than expected, the growth was still its slowest since the company was listed in New York in 2014. Alibaba did not provide an annual forecast. for the current financial year, ending March 2023, citing unpredictability. Vivid interruptions.
Once China’s most valuable listed company, Alibaba’s Hong Kong-listed stock is still down about 23% this year, giving it a market capitalization of about $250 billion. At its peak in the fall of 2020, Alibaba was worth more than $850 billion.
Baidu’s latest gain has dropped year-to-date to around 9%. Hang Seng Technology Index — also includes other heavyweights like Tencent Holdings Ltd.
and Meituan—26% off this year.
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https://www.wsj.com/articles/china-tech-stocks-rally-after-alibaba-and-baidu-beat-forecasts-11653644524?mod=rss_markets_main China Tech Stocks Rally After Alibaba and Baidu Beat Forecasts