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Alibaba stock is sensitive to signs of health among Chinese consumers.
Dreamstime
Chinese data may be boosting risk sentiment in the short-term on Friday, but the performance of two widely-held stocks may suggest investors are not convinced that a slowdown in the world’s second-largest economy is abating.
Fears over stagnation in China’s economy—which investors expected to rebound this year after Covid lockdowns slammed growth in 2022—have rattled global markets in recent months, also weighing on shares in
Alibaba
(ticker: BABA) and
JD.com
(JD).
Both companies have business models sensitive to Chinese consumption trends, and as such have been high-profile stock market victims of slowdown worries, rising and falling—but mostly falling—on the back of economic data releases.
Friday ushered in an opportunity for gains amid signs of surprising growth in China, a trend that should be supportive for
Alibaba
and
JD.com
,
but the reaction across the two stocks has been underwhelming.
Chinese industrial output jumped 4.6% year-over-year in August, ahead of expectations among economists surveyed by FactSet of 3.8% growth and marking an acceleration from July’s 3.7% increase. Chinese retail sales—which have a clear read-across for the big e-commerce names—surged 4.6% annually, above expectations of 3.1% and up from 2.5% in July.
Shares in Alibaba hovered around flat in U.S. premarket trading on Friday, with JD.com stock less than 1% higher.
“While the numbers today are pleasing from the perspective of risk-appetite, investors will probably want to see a trend of better data start to develop before being lured back into Chinese assets with any conviction,” said Tim Waterer, an analyst at broker KCM Trade.
There’s both a strong bull case and bear case on China, but reactions to the latest spate of data show the jury is still out.
Write to Jack Denton at jack.denton@barrons.com