China Stocks in U.S. Rally as Dip Buyers Help Halt Slide
- JD.com and NetEase jump by more than 3% on Wednesday
- Nasdaq Golden Dragon China Index has fallen 20% this year
Chinese stocks traded in the U.S. are getting a much-needed boost as dip buyers help halt a five-day losing streak for the group after the shares went on a wild ride during the Asia trading day.
American depositary receipts for technology giants JD.com Inc. and NetEase Inc. both rose by more than 3% in early trading Wednesday. Other large-cap China firms including Alibaba Group Holdings Ltd., Pinduoduo Inc. and Baidu Inc. were all higher by 1.5% or more. The Nasdaq Golden Dragon China Index climbed as much as 4.7%, its biggest jump since mid-February.
The rally in U.S. hours follows a volatile day in Asia for shares listed in Hong Kong and China. Rising inflation, heightened tensions between the U.S. and China and the exclusion of a firm from Norway’s sovereign wealth fund have added to investors’ worries. The Hang Seng Index and CSI 300 Index saw intraday declines of 3% or more before an afternoon surge cut the losses to less than 1% by the close.
The intraday rebound “has led to speculation that the Chinese authorities moved in to support their stock market,” said Matt Maley, chief market strategist at Miller Tabak + Co. “This has given traders the kind of confidence they need to buy the Chinese ADRs for at least a short-term trade.”
Much like in markets across the globe, investors have been dumping Chinese shares amid worries about the economic fallout from sanctions on Russia after it invaded Ukraine. China’s gross domestic product target for the year, set just last week, has already come into question amid a rapid rise in commodity prices and a surge in coronavirus cases across the nation.
Any sustained momentum for Chinese stocks would be a welcome change for U.S. shareholders. The Nasdaq Golden Dragon China Index — which tracks firms on American exchanges that conduct a majority of their business in China — has closed lower for five straight days and is already down about 20% this year.
Author: Matt Turner, Bloomberg