JD.com leads China tech rally in US after Alibaba revenue beats estimates

CHINESE tech stocks listed in the US got a fresh dose of good news on Thursday (Aug 4) morning after Alibaba Group Holding reported a better-than-expected revenue haul for the first quarter despite China’s ongoing economic woes.

Alibaba’s strong report helped drive a rally in its tech peers, with JD.com, Pinduoduo and Baidu all gaining at least 2 per cent in premarket trading. Shares of the e-commerce giant gained as much as 7.2 per cent, putting it on track to climb for a fourth consecutive day.

“The company mentioned the business recovery in June which should help other ecommerce players like JD.com and Pinduoduo,” said Henry Guo an analyst at M Science. “Investors had low expectations on China ADRs (American depositary receipts) before this print but Alibaba reports suggests likely business upsides to expectations for those companies.”

Chinese tech stocks have been through a tumultuous ride for more than a year amid regulatory crackdowns and a series of bruising lockdowns that damped consumption. While some analysts have been optimistic about earnings results, traders have been offloading the nation’s stocks with the Nasdaq Golden Dragon China Index down about 20 per cent this year after an 11 per cent decline in July. Still, the benchmark has climbed 38 per cent from a March low.

Now, Alibaba’s sales beat may be a welcome sign for investors even as the stock continues to face a litany of other headwinds including a struggling Chinese economy alongside regulatory concerns from authorities in both Beijing and Washington. Last week, the company was added to the US Securities and Exchange Commission’s list of stocks that are at risk of being delisted from American exchanges. That came just days after Alibaba said it would be seeking a primary listing in Hong Kong.

All eyes will be on quarterly results due from other Chinese tech giants such as Baidu, JD.com and Pinduoduo, which are all expected to release their numbers later this month. Baidu’s shares have dropped about 8 per cent this year, while JD.com and Pinduoduo fell more than 12 per cent each. BLOOMBERG