Reuters
Reuters
HONG KONG (Reuters Breakingviews) – Hope is a powerful thing. Just ask China’s $220 billion e-commerce giant Alibaba, whose New York stock has rallied by a third this month despite tepid performance from its annual Singles Day shopping festival and so-so quarterly results. Expectations that Beijing will ease strict pandemic curbs are fuelling the optimism.
Alibaba’s sales in the three months to September confirm Chinese consumption remains weak. Revenue from the domestic commerce unit, accounting for nearly two-thirds of Alibaba’s top line, fell 1% year-on-year, to $19 billion. Boss Daniel Zhang’s cost cuts are paying off, though: the overall adjusted EBITDA margin improved three percentage points to 21%.
Zhang’s messaging on China’s gradual reopening probably resonated with investors more. Speaking to analysts, he flagged the government’s recent measures like shorter quarantines and more targeted lockdowns, saying he “expects things to continue to improve in a positive direction”. Shares of Alibaba, rivals JD.com and Pinduoduo and other Chinese stocks jumped, too. That extended a November rally, sparked by hopes that authorities are softening their zero-Covid stance, which has added more than $95 billion combined to the e-commerce trio’s market value. A lot rides on Beijing’s next move. (By Robyn Mak)
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