What's Going On With Alibaba And Other Chinese Stocks On Monday?

Author: Anusuya Lahiri | July 22, 2024 06:13am

China has made a surprising move to stimulate its economy by lowering key interest rates. The decision comes as the country faces several economic challenges, including weak growth in the second quarter, looming deflation, and a prolonged property crisis.

Chinese stocks, including Alibaba Group Holding Limited (NYSE:BABA), PDD Holdings Inc (NASDAQ:PDD), JD.Com, Inc (NASDAQ:JD), Baidu, Inc (NASDAQ:BIDU), Bilibili Inc (NASDAQ:BILI) are trading higher Monday.

Also Read: Alibaba and Peers Face Challenges as U.S. Tightens Semiconductor Export Rules

On Monday, the People’s Bank of China (PBOC) announced that it would cut the seven-day reverse repo rate to 1.7% from 1.8% and reduce the one-year loan prime rate (LPR) to 3.35% from 3.45%.

Additionally, China lowered the five-year LPR to 3.85% from 3.95%. These measures aim to boost economic activity and achieve the growth targets set during the recent plenum, Reuters reports.

The PBOC has also adjusted its lending programs. Starting in July, it will lower the collateral requirements for its medium-term lending facility loans.

Now, banks will need to hold fewer long-term bonds, enabling them to trade more freely and supporting the central bank’s efforts to stabilize long-term yields and prevent a bond bubble.

Following the rate cuts, Chinese sovereign bond yields fell, with 10-year and 30-year yields dropping by up to 3 basis points before stabilizing. China’s 30-year treasury futures for September 2024 delivery rose by approximately 0.3% in early trade on Monday.

Separate reports indicated that Nvidia Corp (NASDAQ:NVDA) is developing a new AI chip tailored to meet U.S. export restrictions for China, which will boost stocks like Alibaba and Baidu, which are keen on pursuing their AI ambitions.

Alibaba stock lost 22% in the last 12 months as it battles macro and micro headwinds including cancellation of IPOs of its logistics and cloud business and intense domestic e-commerce rivalry from PDD. Baidu lost over 39% as its AI models strive to gain traction. JD.Com lost 32% and Bilibili in the last 12 months. PDD gained 69%.

Price Action: BABA shares are trading higher by 1.66% to $76.52 in the premarket session at the last check on Monday.

Also Read: Alibaba Faces Setbacks with AI Expert Departure Amidst Regulatory Pressures

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo by Eric Prouzet on Unsplash

Posted In: BABA BIDU BILI JD NVDA PDD