Should you trade Alibaba shares?

• Alibaba Group Holding Ltd (HKG: 9988) share price soared to a one-month high
• The e-commerce group, along with other Chinese companies, saw their shares climb after the government unveiled a new economic stimulus package
• ‘More sustained recovery in economic conditions’ will be needed for this uptrend to continue, says IG analyst Yeap Jun Rong
• Keen to trade Alibaba shares? Open an account with us to start today.

Alibaba stock price: what’s the latest forecast?

Alibaba shares rallied as much as 11%, after the Chinese government announced a one trillion yuan (around US$146 billion) stimulus package to help spur the economy.

The State Council, China’s cabinet, spelled out 19 key measures during a meeting last Wednesday (24 August 2022), including the allowance of a further 300 billion yuan that state policy banks will be given to invest in infrastructure projects.

Looking ahead, IG analyst Yeap Jun Rong said that the Chinese stock market’s latest uptick will require a ‘more sustained recovery in economic conditions’ in order for there to be ‘longer lasting market confidence’.

‘While further policy support from China authorities to stabilise its economic growth may be welcomed, market reaction to the announcement was reserved, which may suggest that some caution around the effectiveness of its policy support persists,’ said Yeap.

The e-commerce giant’s share price remains down by around 17% year-to-date, with the Chinese economy continuing to show signs of sluggishness.

DBS analysts rated Alibaba shares a ‘buy’ alongside a price target of HK$144 on 5 August 2022. The price target equates to a 51% upside potential.

Alibaba updates: what else is new?

The US Securities and Exchange Commission (SEC) also struck an agreement with China Securities Regulatory Commission (CSRC) and the Ministry of Finance regarding inspections and investigations of audit firms based in China and Hong Kong.

The SEC had previously been talking about delisting foreign companies whose audit paperwork could not be inspected.

‘This agreement marks the first time we have received such detailed and specific commitments from China that they would allow Public Company Accounting Oversight Board (PCAOB) inspections and investigations meeting US standards,’ the SEC said, adding that it ‘will be meaningful only if the PCAOB actually can inspect and investigate completely audit firms in China’.

Earlier, Alibaba’s revenue for its June-ending quarter came in higher than expected at 205.6 billion yuan (US$30.7 billion).

Meanwhile, non-GAAP diluted earnings per American depository share (ADS) decreased 29% year-on-year (YoY) to 11.73 yuan (US$1.75). Despite the decline, it was still higher than Refinitiv analysts’ expectations of 10.39 yuan (US$1.51) per ADS.

In July 2022, Alibaba shares jumped up as much as 6.5% after it announced it would apply for a primary listing on the Main Board of Hong Kong Stock Exchange, where it has held a secondary listing since November 2019.

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