What happened
Shares of the large Chinese tech conglomerate Alibaba Group (BABA 0.28%) fell about 1% today, as investors were mixed on new economic data that came out earlier today.
So what
Data today showed that China's gross domestic product (GDP) rose 4.5% in the first quarter on a year-over-year basis, as China's economy continued to recover from a difficult 2022 that was plagued by "zero-COVID" policies such as large-scale lockdowns. The growth in GDP beat economist estimates.
Additionally, retail sales were up 10.6% in March on a year-over-year basis, which is the largest jump seen since June 2021. For the first quarter, retail sales increased by 5.8%, largely thanks to the catering service industry.
Oxford Economics Chief Economist Louise Loo said in a note, "the combination of a steady uptick in consumer confidence as well as the still-incomplete release of pent-up demand suggest to us that the consumer-led recovery still has room to run."
However, the market did not perceive all economic data positively. For instance, private investment in the first quarter only grew by 0.6%, which hinted at some slowing in this sector. Real estate investment also dropped by 5.8% in the first quarter, while youth unemployment for those between the ages of 16 and 24 reached 19.6% in March and climbed higher for a third consecutive month.
Now what
I would have expected a more positive reaction from Chinese stocks given the positive GDP growth, but perhaps investors already expected it given the rebound this year compared to much more difficult economic conditions last year.
Despite the down day, I still believe Alibaba presents a good opportunity, especially after the company announced a plan to split into six different units and explore initial public offerings with each one. That should help unlock shareholder value.
