Why Stocks of Alibaba, JD.com and Full Truck Alliance Are Rising Today

What happened

Shares of several Chinese stocks traded on U.S. exchanges rallied on Thursday as more positive inflation news arrived and Wall Street sentiment was generally positive.

Shares of the major Chinese e-commerce company Alibaba Group (BABA 2.64%) was trading about 3.3% higher at 1:32 p.m. ET today. Shares of another major Chinese e-commerce company, JD.com (JD 2.60%)are trading up more than 3% and the shares of the digital freight platform Complete Truck Alliance (MMD 8.34%) traded almost 9% higher.

So what

The market continued to receive good inflation news today, with the latest Producer Price Index (PPI) data coming in weaker in July than economists had expected. This follows yesterday’s data which showed the consumer price index (CPI) in July rose at a much weaker pace than economists had expected on an annual basis. From June, the CPI remained unchanged.

Image source: Getty Images.

Investors use both the PPI and the CPI to gauge inflation, so both data points were good news and showed that inflation may have peaked in July. If inflation continues to ease, the Federal Reserve may be able to slow the pace of interest rate hikes, which would benefit most tech stocks.

In other news, Bank of America Analyst Eddie Leung today published a positive research note on Alibaba indicating that the company’s logistics division, which is called Cainiao, continues to make progress and now has a cross-border network of 200 partners in 30 countries. and 80 weekly flights through 50 ports with the potential to transport more than 12 million parcels.

“This improves cross-border business for merchants, the consumer experience, and the execution and operational efficiency of the logistics ecosystem, including partners, which drives improved margins,” Leung wrote. in his research note.

Cainiao accounted for about 6% of Alibaba’s second-quarter revenue, so it’s not a huge driver of business, but it’s not negligible either. Leung has a buy rating on Alibaba and a price target of $156, implying a lot of upside from Alibaba’s current stock price of $95.20.

Alibaba recently reported earnings and revenue above estimates in the difficult quarter, although for the first time since the company’s launch, Alibaba reported stable quarterly revenue growth on a year-on-year basis. However, CEO Daniel Zhang said in a statement, “we saw signs of recovery in our business in June.”

Positive signs of recovery and the pace of earnings should bode well for JD.com, which also operates in e-commerce and similar markets. The company is expected to release its results on August 23.

Now what

Alibaba is certainly one of the better-known Chinese companies that trades on a US stock exchange, so good news for the company tends to displace other Chinese stocks as well, especially JD.com, as they both operate in the field of e-commerce.

Chinese stocks can be difficult to invest in because you are investing in a completely different economy and in stocks that are under intense regulatory scrutiny. Chinese government decisions can also quickly change the outlook for these companies.

But of the group, Alibaba and JD.com are definitely two Chinese stocks to watch, and I like Full Truck Alliance’s business as well.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool fills positions and recommends JD.com. The Motley Fool has a disclosure policy.

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