What’s going on
Chinese stocks trading on US exchanges continued to struggle today amid broader economic concerns and rising COVID cases in the country.
In fact, the Nasdaq Golden Dragon China Index, which tracks many popular stocks, fell 7.3% today to a nearly nine-year low. Bloomberg.
Shares of a major e-commerce company Alibaba (baby 3.83%) Shares of the digital freight company are down about 6.6% today Full Truck Alliance (YMM 1.55%) decreased by 7%. Meanwhile, shares of the real estate platform KE Holdings (BEKE 4.20%) fell more than 8% on the day.
Image source: Getty Images.
So what
Earlier this week, Chinese stocks performed well on Monday after Chinese President Xi Jinping said at the National Congress of the Communist Party of China that there would be a strong emphasis on making China a more prominent technology player in the world.
However, Jinping did not address existing concerns about an economy that has slowed this year due to the country’s particularly tough lockdowns, which have been imposed mainly to prevent the spread of COVID-19. economy.
China also delayed the release of key economic data this week, such as third-quarter gross domestic product (GDP) growth, which is expected to grow by around 3.4%. Reuters bit
But Bruce Pang, chief economist for Hong Kong Jones Lang Lasallesaid that “the release of delayed economic data is not due to a poor economic recovery, but to the ongoing Congress, because officials want the media and the public to focus on the key messages conveyed by the big event.”
But investors continue to worry about the economy today. After all, the World Bank expects China’s GDP to grow by 2.8% this year, while the Chinese government initially promised growth of 5.5% a year.
The rapidly spreading cases of COVID continue to worry the country. Houses in Beijing hit a four-month high, with more than 1 million people in the city of Zhengzhou under lockdown earlier this week.
And at the National Congress this week, Jinping not only insisted that his COVID policies would continue, he defended them.
“We put people first and we put life first, and we unhesitatingly support ‘dynamic zero COVID,'” he said. Bloomberg.
Now what
Alibaba, Full Truck Alliance and KE Holdings have seen their shares sell off heavily this year. Each company has strong potential in China given its wide reach and huge market potential.
Alibaba reached more than 1 billion users across its businesses earlier this year. In 2021, more than 3.5 million truckers used Full Truck Alliance to fulfill trucking orders, and at the end of the second quarter of this year, there were 43 million monthly active users on the KE Holdings platform.
still, Chinese stocks may face a heavily regulated environment and fall victim to the ups and downs of the economy, as is the case everywhere. I think each of these names has good potential, but it won’t come overnight and there could be a lot of volatility along the way,
Bram Berkowitz has no position in any of the listed stocks. The Motley Fool has no position in any of the stocks listed. The Motley Fool has it disclosure policy.
