Shares of several Chinese stocks listed on U.S. exchanges jumped out of the gate this morning after the Chinese government said it intends to provide more stimulus for the economy. There has also been chatter recently that China may ease some of its harsher regulatory policies toward tech companies.
Shares of the large Chinese ride-hailing company DiDi Global (DIDI -1.08%) traded more than 7.5% higher as of 11 a.m. ET. Shares of JD.com (JD -2.10%) traded roughly 8.4% higher and shares of Alibaba Group Holding (BABA -2.30%) traded nearly 11% higher.
The Chinese government earlier today said it would support the Chinese economy and the development of Chinese tech companies. There are also rumors circulating that the government will soon meet with big tech companies to discuss potentially easing up on certain regulatory policies that have hurt Chinese stocks. Government officials said their goal with stimulus is to help the country reach its 5.5% gross domestic product (GDP) growth target this year, which many believe is looking more and more out of reach.
China's economy has struggled with global issues such as Russia's invasion of Ukraine, as well as country-specific issues such as mass lockdowns due to rising COVID-19 cases that have threatened to hamper economic growth.
In recent months, Beijing has started to show a much friendlier attitude toward Chinese tech companies and stocks. Recently, the Chinese government announced it would work with U.S. financial regulators to try to come to terms on an auditing dispute that could lead to hundreds of Chinese stocks being delisted from U.S. exchanges. Now, China is vowing to support its economy and Chinese tech companies with measures such as tax cuts and lower fees.
Stocks like DiDi have been hurt by Chinese policy. For instance, DiDi has had its app banned from Chinese app stores. The Chinese government has also set higher standards for how big tech treats and compensates employees such as drivers. The government also fined Alibaba a whopping $2.75 billion for violating the country's antitrust policy. Chinese stocks have taken a beating as a result.
The Chinese government and regulators play a big role in how Chinese stocks perform because of how quickly it can intervene and impose new policies. So the fact that there have been multiple actions and statements showing supportive policy from the government is certainly good news and could signal better times ahead for Chinese stocks.
But I think investors will want to see more action for a sustained rally. That would mean seeing the Chinese government come to an agreement with U.S. regulators over the auditing dispute or implementing stimulus measures.
I still have concerns about DiDi, especially as the company considers delisting from the New York Stock Exchange, but feel better about Alibaba or JD.com.