Topline
Shares of the largest Chinese heavyweights trading in the United States surged Wednesday after data showed China’s manufacturing sector unexpectedly expanded at the fastest pace in more than a decade last month—adding more than $25 billion in market value amid hopes the nation’s economy could bounce back from a lockdown-induced downturn more quickly than previously expected.
Jack Ma, co-founder and former executive chair of Chinese e-commerce giant Alibaba.
Key Facts
Though the broader market fell on Wednesday, shares of Tencent jumped nearly 6%, logging what could be the stock’s biggest one-day gain in more than three months, as Hong Kong’s Hang Seng Index notched its biggest percentage increase since December, climbing more than 4%.
Sparking the morning surge, China’s National Bureau of Statistics reported the nation’s purchasing managers’ index, which gauges the health of the manufacturing sector, rose to 52.6 in February from 50.1 in January, surging past analyst expectations of 50.5 and marking the highest level since April 2022.
The unexpected gain indicates China’s post-pandemic recovery, which has long been marred by ongoing Covid lockdowns that ushered in the economy’s second-worst showing since 1976 last year, is gaining momentum, says Sevens Report analyst Tom Essaye, who notes the data helped fuel optimism across global markets on Wednesday.
The rally was particularly widespread, with each of the nation’s 10 largest stocks trading in the U.S. climbing on Wednesday—collectively gaining more than $25 billion in market value, with fast-food company Yum China, Internet giant Baidu and biotechnology firm Beigene up 3.5%, 4% and 7%, respectively.
Among the biggest value gainers were ecommerce monolith Alibaba and games company Pinduoduo, which added more than $7 billion and $6 billion in value.
Tangent
The Nasdaq Golden Dragon China Index, which tracks Chinese businesses trading in the United States, jumped 4% Wednesday—paring losses from a 15% decline since late January. The index has plunged more than 30% since the pandemic started but is up more than 50% from the lockdown-spurred depths of late last year, when record Covid waves stunted the Chinese economy.
Key Background
Chinese stocks have lost massive amounts of value since Beijing officials issued a series of sweeping private sector regulations in 2021 and then faced intensifying waves of Covid infections last year. However, analysts have since started to become bullish on the world’s second-largest economy. “There’s pent-up savings, there’s pent-up demand, so we think that China will see very strong growth, especially as you get later in the year,” Douglas Peterson, the President of S&P Global, said at a World Economic Forum panel last month.
Crucial Quote
“We believe the market is under-appreciating the far-reaching ramifications of [China’s] reopening and the possibility that a robust cyclical recovery can occur,” says Morgan Stanley’s Laura Wang, who projects the nation’s economy will expand 5.7% this year—more than average expectations of roughly 5%.
Further Reading
Chinese Stocks Gain $70 Billion As Ant Group’s New $1.5 Billion Plan Fuels Investor Optimism (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2023/03/01/these-us-listed-stocks-surge-alibaba-baidu-and-more-after-chinas-economic-rebound/