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Why Alibaba Group's Shares Rose 13% Last Month

By Anders Bylund – Dec 7, 2018 at 1:46PM

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The Chinese e-tailer directed a successful Singles Day sales event, and international trade tensions seemed to cool down -- for a while.

What happened

Shares of Alibaba Group (BABA 2.38%) gained 13.1% in November of 2018, according to data from S&P Global Market Intelligence. The Chinese e-commerce giant set a new single-day sales record and continued to rise as the cumbersome trade tensions between Beijing and Washington appeared to relax a bit.

So what

The shopping event known as Singles Day, which falls on Nov. 11 and is the Chinese equivalent to our Black Friday retail frenzy, saw Alibaba take orders for $30.7 billion in a 24-hour period. It was the largest order volume in Alibaba's or that event's history, 27% above the numbers seen a year earlier. Share prices rose 6% over the next two days.

Alibaba's corporate logo, featuring a cartoon-style smiling genie in a lowercase letter A.

Image source: Alibaba.

The specter of trade tensions and cross-border tariffs on goods moving between China and the U.S. has been weighing on Alibaba's stock in recent months, sending share prices as much as 39% below June's all-time highs. Trump started to talk about a trade truce near the end of November, with a meeting with his Chinese counterpart at the G-20 summit scheduled for that weekend. Stock markets around the world reacted positively to that development, and Alibaba's shares rose even faster to end the month.

Now what

A 90-day truce was indeed announced at the G-20 confab, but the resulting gains quickly evaporated since a pause in tariff increases falls far short of an actual end to the conflict. Moreover, a high-profile Chinese business leader was recently arrested in Canada and might end up extradited to the U.S., accused of violating economic sanctions on Iran.

So the trade war rolls on, albeit with a temporary pause in boosted tariff rates. We Alibaba investors would love to see an end to this conflict, because a lot of Alibaba's goods actually end up on American soil.

Anders Bylund owns shares of Alibaba Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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