Alibaba stock scores 24% winning streak as low valuation lures buyers

[SINGAPORE] Alibaba Group Holding's strong share price recovery hit a pause on Tuesday on concerns of rising bond yields, reversing some of the 24 per cent gain in the last four sessions.

The stock fell as much as 5.2 per cent in Hong Kong, contributing the most to the losses in the Hang Seng Index, which slid over 1 per cent. There may be a potential tailwind for bond yields to increase further on expectations of more persistent inflationary pressures, which may weigh on tech, according to IG Asia.

The stock had surged since hitting a record low in Hong Kong on Oct 5 through Monday, after having "gotten very cheap", according to James Cordwell, an analyst at Atlantic Equities LLP. Alibaba trades at 17 times forward earnings estimates, compared with a multiple of 24 for Tencent Holdings and 38 for JD.com. Tencent shares have gained 7 per cent since a week ago.

A regulatory fine on Chinese food delivery giant Meituan "led to some speculation that we are getting toward the end of some of the regulatory scrutiny the sector has been facing", Cordwell said.

Easing US-China tension and signs of improvement in consumer spending over the Golden Week holiday are also positive developments, he added.

The e-commerce giant has no sell ratings, with 36 out of 38 analysts giving it a buy, according to Bloomberg-compiled data. They forecast shares to rise 51 per cent over the next 12 months versus a 32 per cent and 20 per cent gain for Tencent and Meituan, respectively.

BLOOMBERG