- Alibaba stock jumped 10% as US President Biden and his Chinese counterpart are headed for a virtual meeting this year
- The talks could lead to an easing in political tensions between the economic powerhouses.
- Alibaba stock this year has suffered from Beijing’s regulatory crackdown on businesses.
Alibaba stock leapt nearly 10% on Thursday following World News that US President Joe Biden and Chinese counterpart Xi Jinping will meet later this year, stoking anticipation they will be able to lessen tensions between the world’s largest economies.
Shares of the Chinese e-commerce behemoth climbed as much as 9.8% to $158.29 before paring the rise to 8.5%. The push brought the price to its strongest level since mid-September.
Alibaba stock also was catching the eye of retail investors, with Swaggy Stocks showing it running second in ticket sentiment on Reddit’s WallStreetBets forum.
The US and China agreed in principle for Biden and Xi to hold a virtual meeting before 2021 ends, Reuters reported Wednesday, citing a senior US administration official. Earlier on Wednesday, US national security adviser Jake Sullivan and Yang Jiechi, China’s top diplomat, met face-to-face for the first time since an unusually public airing of grievances in March, the report said.
Since Biden has taken office, he has maintained key components of tough China trade policies that began under the Trump administration. On Monday, U.S. Trade Representative Katherine Tai said the White House wants to restart trade talks with China but will keep steep tariffs in place for now.
Other issues have also strained US-China ties lately, including Beijing’s threats against Taiwan, its claims in the South China Sea, and the treatment of ethnic Uighur minorities.
“Investors should understand that the United States and China getting along and working together is good for equity markets around the globe,” said Naeem Aslam, chief market analyst at AvaTrade, in a note.
Meanwhile, Alibaba and other US-listed Chinese stocks have also been dragged lower during the year with Beijing ramping up a regulatory crackdown on a wide range of companies in a campaign to reform various business and social practices. Securities and Exchange Commissioner Gary Gensler last month said he doesn’t believe China-related companies are providing adequate information about the risks they and, in turn, American investors, face.
China’s regulatory crackdown has accelerated since late 2020, when Alibaba founder Jack Ma made comments critical of some Chinese institutions. His financial services platform Ant Group later withdrew an IPO in Shanghai and Hong Kong under pressure from the government.
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Alibaba stock this week also appeared to find support from World News that Charlie Munger – best known as Warren Buffett’s business partner and Berkshire Hathaway’s vice-chairman – has doubled down on his bet on Alibaba. Munger’s publishing company Daily Journal increased its stake last quarter to 83%.
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