Shares in Chinese tech giants Alibaba and JD.com are rising after China cut rates.
Alain Jocard/AFP via Getty Images
It’s a good day for Chinese tech stocks.
While the wider U.S.-listed tech sector is poised for a rebound Thursday—after the heavily tech-weighted Nasdaq index fell into correction territory Wednesday—the likes of
rose more than 1% Thursday, after it tumbled 1.8% Wednesday to mark a 10.7% decline from its highs in mid-November. Tech at large was perking up. Popular names like
(ticker: AAPL) rose 0.6% and
(TSLA) lifted 1.8%.
But Alibaba (BABA) and JD.com (JD) have jumped 5.5% and 6.5%, respectively, following on from a strong session in Asia. Alibaba’s Hong Kong shares (9988.H.K.) surged 5.8% in Thursday’s session, with JD.com (9618.H.K.) tearing 6.5% higher.
Helping tech stocks across the board is a fall in bond yields. Many high-growth companies like those in the technology sector have stock market valuations that rely on the prospect of profits years in the future. Higher bond yields discount the present value of future cash, making those valuations less attractive.
The yield on the benchmark 10-year U.S. Treasury note spiked to just shy of 1.9% this week—it closed out 2021 at 1.51%—but has since pulled back to near 1.82%. That’s good for tech investors.
For Chinese tech, there’s another key factor…