Alibaba, JD.com, and other U.S.-listed Chinese companies experienced a rebound on Thursday following efforts by Beijing to alleviate concerns of an economic downturn.
Uncertainty Surrounding China’s GDP Growth Target
China has set a GDP growth target of 5% for 2023. However, economists are growing increasingly skeptical about the country’s ability to achieve this goal. In fact, Morgan Stanley lowered its Chinese GDP forecast from 5% to 4.7% on Thursday, while J.P. Morgan revised its forecast down to 4.8% earlier in the week. Barclays also decreased its forecast to 4.5% from 4.8%.
Commitment to Meeting Annual Goals
In a speech on Wednesday, Chinese Premier Li Qiang expressed the country’s commitment to meeting its annual goals and outlined measures to attain them. The government plans to prioritize “expanding domestic demand” through consumer-focused policies and stimulating investment. Li emphasized the promotion of consumption of high-value products as well as the modernization of traditional industries through new technologies and business models.
Reassurance from Chinese Premier
Despite acknowledging the challenges ahead, Li remained resolute and confident about China’s economic prospects. The government’s determination was reinforced in an English translation by Xinhua News Agency.
Market Reaction and Partial Recovery
After a 2.7% decline on Wednesday, Alibaba’s American depositary receipts (ADRs) rebounded by 2.8% early on Thursday. Similarly, JD.com’s ADRs, which experienced a 3% drop the previous day, increased by 1.6%, while Baidu rose by 1.3% following a 3.5% decline.
Mixed Impact on Hong Kong Stocks
Li’s speech did not significantly impact Hong Kong stocks, as the Hang Seng Index closed flat on Thursday. However, the Hang Seng Tech Index managed to end 0.8% higher.
