Alibaba Group Holding Ltd., JD.com Inc., and Meituan experienced a remarkable surge in their stock prices following the Chinese government’s announcement of an extensive stimulus plan aimed at reviving the sluggish domestic economy.
The announcement sparked a robust buying spree, not just limited to these consumer tech firms but resonating across various sectors as investors placed bets on the effectiveness of Beijing’s new policies. Meituan and JD.com saw their stock prices jump over 20% in Hong Kong trading over two days, marking their best performance since 2022. Meanwhile, Alibaba enjoyed a substantial rise of up to 15% during the same period, reflecting growing investor confidence.
The stimulus measures come at a crucial time, as the Chinese economy grapples with challenges such as a struggling property sector and alarming youth unemployment rates. The government’s plan includes financial support for the beleaguered real estate market, cash handouts for citizens facing economic difficulties, and increased social security benefits for unemployed graduates. This comprehensive approach aims to alleviate fears surrounding the debt-ridden property market and stimulate consumer spending, particularly benefiting tech firms.
Cash-rich companies like Alibaba are also leading a resurgence in stock buybacks in Hong Kong this year. This strategy has proved effective, with Alibaba’s shareholder yield surpassing 8% at the start of the month—more than double that of major US firms in the “Magnificent Seven.” Until recently, these buybacks were primarily defensive, aimed at mitigating declines amid economic uncertainty. However, combined with the government’s recent announcements, this trend is reigniting interest in China’s beleaguered tech sector.
Experts believe the government’s decisive actions signal a commitment to stabilizing employment, enhancing social stability, and fostering economic growth. The recent measures, alongside the People’s Bank of China’s unexpected stimulus, indicate a serious intent from policymakers to reinvigorate the economy. As momentum builds, analysts anticipate further support focusing on job stabilization and boosting consumer demand, potentially leading to a broader recovery.
For more details, visit the full article on Bloomberg: Alibaba, JD and Meituan Surge After China Stimulus Announcement.