- Analysts slashed the earnings estimates for the Chinese technology giants for a second straight month amid the nation’s persistent goal of its Covid-Zero strategy, Bloomberg reports.
- Analysts trimmed Alibaba Group Holding Limited (NYSE:BABA) estimates by 4.2% and Baidu, Inc (NASDAQ:BIDU) by 8.1%.
- U.S.-listed shares of Baidu have lost 10% in April, while those of Alibaba sank 20%, Bloomberg reported.
- Analysts have pruned profit projections for Hang Seng Tech Index members by 4% in April, following a similar reduction in March. The index has slumped 11% this month, extending its 2022 loss to 28%.
- The sector is already vulnerable to regulatory crackdowns, Federal Reserve interest-rate hikes luring capital away from riskier assets, and speculation of more firms losing their U.S. stock exchange listings.
- Analysts saw the sustained regulatory tightening, the Covid resurgence in recent months, and the stringent zero Covid policy likely aggravating the slowdown in revenue growth for several companies, particularly the internet ones.
- The tech companies were vulnerable to supply-chain disruptions or household and business spending.
- However, analysts also saw that the technology sector would be one of the first to rebound once the economy reopens.
- Price Action: BABA shares traded higher by 2.77% at $90.77 on the last check Thursday.
