Chinese stocks closed 3% higher on December 9 after government officials in Beijing said they plan to introduce more economic stimulus measures to boost economic growth in the nation of 1.4 billion people.
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Hong Kong’s benchmark Hang Seng index climbed 3% higher after China’s government promised “more proactive” fiscal measures and looser monetary policy to boost domestic consumption. Shares of e-commerce company Alibaba (BABA) rose 8% on the news, while internet company Baidu (BIDU) saw its share price jump 9% higher on the day.
The latest promise of economic stimulus comes after inflation in China fell to a five-month low in November as the economy continues to slow. Inflation in China rose 0.2% in November from a year ago, according to China’s National Bureau of Statistics. Economists had expected inflation to rise 0.5% year-over-year in November.
Post-Pandemic Slump
At the same time, China’s producer price index, or wholesale inflation, declined for the 26th consecutive month, falling by 2.5% in November. Prices for ferrous metal materials led declines with a drop of 7.1%, while fuel and power prices decreased by 6.5%.
The decline in prices comes as China’s economy continues to slump coming out of the Covid-19 pandemic. The domestic economy has struggled with a sharp slowdown in domestic consumer spending and consumption in recent years. China is the world’s second-largest economy after the U.S.
BABA stock has risen 22% so far in 2024.
Is BABA Stock a Buy?
The stock of Alibaba has a consensus Strong Buy rating among 15 Wall Street analysts. That rating is based on 14 Buy and one Hold recommendations issued in the last three months. The average BABA price target of $127.05 implies 36.31% upside from current levels.
