U.S.-listed China tech stocks fell in Tuesday trading, as investors debated whether government stimulus plans can reignite growth for the Chinese economy. Alibaba stock and shares of JD.com and Baidu were each lower in higher-than-average trading volume.
American depositary receipts for China's largest tech firms surged starting in late September, after the country's central bank announced plans to cut interest rates, among other measures. Economists initially described the plans as China's most forceful stimulus efforts since it ended its zero Covid policy in late 2022. But that optimism appears to be waning.
Shares of e-commerce and cloud computing giant Alibaba stock are down more than 4% at 102.46 in recent action on the stock market today. Shares rocketed nearly 30% higher from the final week of September through October. But Alibaba has since pulled back by nearly 10%. Meanwhile, shares of Alibaba's e-commerce rival JD.com is down 7% at 40.90. U.S.-listed JD stock soared by nearly 60% during the recent rally for China stocks but shares have pulled back by about 13% from recent highs earlier this month.
China Stock Stimulus Debate
U.S.-listed share of Chinese search giant Baidu have moved in a similar fashion. Baidu stock also fell more than 4% to 94.85. The stock jumped by nearly 30% during the final week of September and first week of October. That rally was followed by a 6% decline last week and a 7% slump to start this week.
The stimulus-fueled rally for China-related stocks began to lose steam on Oct. 8. A press conference from China's economic planning agency that day failed to deliver any immediate fiscal stimulus. Chinese stocks plunged lower.
On Saturday, China's Finance Ministry outlined measures that included stimulus for state banks and local governments. Investors are debating the power of the measures announced so far.
The Saturday press conference "was strong on determination but lacking in numerical details," Vasu Menon, managing director for investment strategy at OCBC in Singapore, told Reuters. Menon added that it did not feature the "big bang fiscal stimulus" investors were hopeful to see.
Alibaba Stock: Chasing 2020 Highs
Even with the pullback, Alibaba stock is trading at levels not seen since August 2023. JD stock is hovering at its highest point since March 2023. The stocks are still well below record highs seen in late 2020 and early 2021, respectively, before a Chinese government regulatory crackdown pushed shares lower.
The slumping economy in China has weighed on sales for its technology companies. Alibaba's revenue grew 4% for its June-ended quarter, while JD grew 1.2% and Baidu's sales were flat from a year earlier.
With Tuesday's decline, Alibaba stock is hovering near its 21-day moving average. JD, however, is still trading well above its 21-day and 50-day moving averages.
