Shares of Alibaba and other Chinese stocks experienced a dip as the initial rebound driven by confidence in government stimulus plans started to lose momentum.
Decline in Alibaba Shares
Alibaba saw a decline of 1.4% in U.S. premarket trading, marking a reversal after experiencing a nearly 10% gain over the course of five days. Other popular Chinese stocks, including JD.com and PDD Holdings, also experienced a 2% decrease.
Asian Trading and Market Performance
During Asian trading, Hong Kong’s Hang Seng Index fell by 1.6%, breaking its three-day winning streak which had resulted in an 8% gain for the benchmark. On the other hand, the Shanghai Composite managed to eke out a 0.1% gain following Thursday’s impressive performance, which had been its best day since early 2022.
Stimulus Plans to Support Growth
The recent surge in Chinese stocks has been driven by reports of government stimulus plans aimed at supporting growth in the world’s second-largest economy and bolstering equity markets. Potential plans include direct buying of Hong Kong stocks and injecting liquidity into markets by cutting banks’ reserve ratio requirements.
Global Investor Concerns
The slowdown in China’s economy over the past year has caused concern among global investors. While previous government stimulus plans have failed to generate significant market impact, this week’s rally seemed more promising, although it appeared to be losing momentum heading into the weekend.
Prospects for Economic Kick-start
Joshua Mahony, an analyst at broker Scope Markets, noted that the recent resurgence of China-related stocks seems to have abruptly ended. However, he suggests that a more proactive approach to kick-starting the Chinese economy could potentially boost sentiment.