Why Shares of Alibaba, Full Truck Alliance, and KE Holdings Fell Today

What happened

Chinese stock trading on US bourses continued to struggle today amid broader economic concerns in the country and rising COVID cases.

In fact, the Nasdaq Golden Dragon China Index, which tracks many popular stocks, is down 7.3% today, and reportedly hit its lowest level in about nine years Bloomberg.

Shares of the big e-commerce company Alibaba (BABA -6.64%) fell around 6.6% today, while shares of the digital freight company Complete truck alliance (YMM -6.79%) fell to almost 7%. Meanwhile shares of the real estate platform KE stocks (Beke -8.05%) ended the day down more than 8%.

Line with arrow moving down and person trying to move it back up.

Image source: Getty Images.

so what

Chinese stocks performed well earlier on Monday this week after China’s President Xi Jinping said at the Chinese Communist Party National Congress that there would be a strong focus on making China a more significant technological player in the world.

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However, Jinping did not seem to address the current concerns about the economy, which has been slowing this year, mainly due to measures put in place to prevent the spread of COVID-19 in the country, such as a. B. Lockdowns, which have been particularly difficult for the country’s economy.

China also delayed the release of key economic data this week, such as third-quarter gross domestic product (GDP) growth, which a Reuters Opinion poll.

However, Bruce Pang, chief economist in Hong Kong for Jones Lang Lasallesaid: “The delayed release of economic data is not due to the poor economic recovery but to the ongoing Congress as the authorities want the media and the public to focus on the key messages of the big event.”

But investors remain nervous about the economy today. After all, the World Bank expects China’s GDP to grow by just 2.8% this year, while the Chinese government originally promised growth of 5.5% next year.

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The rapidly spreading COVID cases also remain a concern for the country. Cases in Beijing recently hit a four-month high, while more than 1 million people in the city of Zhengzhou went into lockdown earlier this week.

And at this week’s national convention, Jinping not only hinted that his COVID policy would continue, but defended it.

“We have put people first and life first and have adhered to ‘dynamic COVID zero’ without hesitation,” he said loudly Bloomberg.

What now

Alibaba, Full Truck Alliance, and KE Holdings have all seen their stocks sell off badly this year. Each company has a strong potential given its enormous reach and market potential in China.

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Alibaba reached more than 1 billion users across all of its businesses earlier this year. In 2021, more than 3.5 million truckers used the Full Truck Alliance to fulfill shipping orders, and at the end of the second quarter of this year, there were 43 million monthly active users on the KE Holdings platform.

Still, Chinese stocks can face a highly regulated environment and, like everywhere else, fall victim to the ups and downs of the economy. I think each of these names has good potential but it won’t come overnight and there could be a lot of volatility along the way,

Bram Berkowitz does not hold any of the shares mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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