Why Chinese Stocks Alibaba, Tencent, and PDD Holdings Were Rallying Despite a Tariff War

Core Viewpoint - Chinese e-commerce stocks, including Alibaba, Tencent, and PDD Holdings, experienced significant gains despite the announcement of new tariffs by the U.S. government, indicating that investors may perceive the situation as less severe than initially feared [1][8]. Group 1: Market Reactions - Alibaba shares rose by 4.7%, Tencent by 4.1%, and PDD Holdings by 8.8% as of 1 p.m. ET [1]. - The positive movement in Chinese stocks may be attributed to the delayed tariffs on goods from Mexico and Canada, which were postponed for a month following negotiations [3]. - Investors may view China's countermeasures as relatively mild, targeting only about $20 billion of U.S.-imported goods, significantly less than the$450 billion worth of Chinese goods affected by the U.S. tariffs [8]. Group 2: Trade Measures and Implications - China announced a 15% tariff on certain U.S. goods, including oil and agricultural machinery, and a 10% tariff on coal and natural gas, effective February 10 [4]. - The countermeasures are seen as a warning rather than a full-scale retaliation, providing a window for potential negotiations between the U.S. and China [9]. - The ongoing trade tensions could impact companies like PDD Holdings, which operates the international e-commerce platform Temu, potentially affecting its growth in the U.S. market [7]. Group 3: Economic Outlook - Alibaba and Tencent are sensitive to China's overall economic outlook, as they are major players in e-commerce, cloud computing, and fintech [6]. - The potential for an escalating trade war poses risks for the Chinese economy and, consequently, for leading Chinese e-commerce stocks [6][11]. - Despite recent gains, these stocks are not as cheap as they were six months ago, following a rally due to new Chinese stimulus measures [11].