Alibaba Group Holding Ltd., JD.com Inc., and Meituan have reported their best trading days in years, following the Chinese government’s announcement of a comprehensive economic stimulus package. This move is seen as a lifeline for the beleaguered domestic economy, as firms within the sector rallied to capitalize on the optimism generated by Beijing’s new policies.
The announcement has sparked a buying frenzy, propelling shares of these companies to new heights. Over just two trading days, JD and Meituan surged more than 20% on the Hong Kong Stock Exchange, achieving their most impressive two-day gains since 2022. Alibaba also benefited, climbing as much as 15% during the same period. Analysts are viewing these developments as a promising sign for the future of e-commerce and internet firms in China, which have struggled amid economic uncertainty.
The Chinese government’s recent stimulus measures are notably extensive, providing crucial support for the struggling property sector and offering cash handouts to residents facing financial hardships. Additionally, new social security benefits aimed at unemployed graduates were introduced, addressing rising concerns about youth unemployment and the debt-laden property market. These measures are expected to rejuvenate consumer spending and bolster internet companies that have been hit hard by recent market challenges.
Cash-rich firms like Alibaba are also leading a trend in share buybacks in Hong Kong this year, as investors regain confidence. The returns from China’s top tech stocks are now outperforming their global competitors, with Alibaba boasting a shareholder yield exceeding 8%. This financial strategy had initially served as a defensive tactic amid economic skepticism, but the recent stimulus has reinvigorated interest in China’s tech landscape.
According to Bloomberg Economics, the combined efforts of the People’s Bank of China and the Politburo signal a more serious commitment to economic recovery and job stabilization. With the policy momentum shifting toward revitalization, additional measures focusing on job security and consumer demand are anticipated in the near future.
As the market responds positively, it appears that the optimism surrounding these consumer tech giants could signal a broader economic rebound in China. For further details, visit the full article on Bloomberg.