Has the Worst Passed for Chinese IT Stocks?…Alibaba Shares Rise 24% in One Week

Alibaba Stock Price Trend [Image Source= Bloomberg]

[Asia Economy Reporter Park Byung-hee] Alibaba's stock price has surged 24% over the past week, showing a strong rebound trend, Bloomberg reported on the 11th (local time).

Analysts suggest that the decline was excessive, and the recent antitrust fine imposed on Meituan by Chinese authorities was smaller than expected, which acted as a positive factor.

James Coddwell, an analyst at Atlantic Equity, analyzed that Alibaba's stock price had become very cheap, leading to the rebound. Coddwell recommended buying, noting that Alibaba's price-to-earnings ratio (PER) is only 17 times, much lower compared to Tencent's 25 times and JD.com's 39 times.

Alibaba's stock price rose 24% from the low point recorded on the 5th in the Hong Kong stock market until this day. Tencent's stock price also increased by about 10% over the past week.

Another positive factor is that the antitrust fine of 3.44 billion yuan imposed by Chinese authorities on Meituan, the country's largest food delivery company, on the 8th was smaller than expected. Analysts suggest this may somewhat ease the regulatory pressure that has weighed down Chinese IT companies' stock prices.

Analyst Coddwell said that the smaller-than-expected fine on Meituan has led to speculation that the regulatory crackdown is nearing its end. He also explained that signs of easing tensions between the U.S. and China have appeared through a video call between senior trade representatives of the two countries on the 9th, and that positive Chinese consumption indicators during the National Day holiday are also favorable factors.

Bloomberg reported that out of 38 analysts, 36 have a "buy" rating on Alibaba, with none recommending a sell. They also added that Alibaba's stock price is expected to rise 45% over the next year. Tencent and Meituan's stock prices are also expected to increase by 28% and 18%, respectively.

This content was produced with the assistance of AI translation services.