Chinese Stocks: Why BABA, DIDI, NIO, PDD, BILI, JD Stocks Are Gaining Today

It seems like the Chinese government is finally cutting its companies a break today. Amid a tumultuous time for investors and the companies themselves, the Chinese Communist Party (CCP) is offering some new regulatory clarity that’s putting everybody at ease. It’s also catalyzing gains for some of the most popular Chinese stocks. Thanks to this clarity, it appears some big names are returning back to this geographical sector.

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China has been cracking down on its tech industry at an unprecedented rate this year. The government has conducted many a probe into these companies for reasons ranging from antitrust concerns to data security worries.

Companies like ride-sharing app DiDi (NYSE:DIDI) found itself under investigation shortly after listing on the U.S. market. Of course, these companies aren’t actually traded on Wall Street; because the CCP doesn’t want foreigners investing in its homeland stocks, the companies list under shell companies to skirt heavy restrictions on overseas listings. Even giants like Alibaba (NYSE:BABA) have failed to escape antitrust probing — the company has been slapped with a nearly $3 billion fine as a result of a government investigation.

New Data Law and Optimistic Outlooks Allow Chinese Stocks to Rebound

These Chinese stocks are rebounding today thanks to two factors. First, a new data privacy law is passing in China. The law is not published yet, but previous iterations suggest that it will force companies to seek consent from users to collect their data.

The law has some optimistic that regulations will now slow down; as CNBC reports, New York University law professor Winston Ma says that with the new law, “Chinese regulators may finally take a pause in 2021 from unabating lawmaking for the tech industry.”

Additionally, some companies are making moves and reporting impressive earnings, allowing investors to get excited again. Industry giant Tencent Holdings (OTCMKTS:TCEHY) is buying back 230,000 shares of its stock. Meanwhile, (NASDAQ:JD) and Pinduoduo (NASDAQ:PDD) each posted solid earnings; PDD stock saw revenue double year-over-year, while JD beat revenue expectations by $1 billion.

JD’s earnings report is spurring significant interest from institutions as well. Cathie Wood is taking notice of the company’s earnings beat. Accordingly, her Ark Investment Management firm is buying American depository receipts of JD.

All of this news is making for some solid gains across the sector. PDD stock is up 14% this morning. BABA and JD are increasing by 6.5% and 12%, respectively. DIDI is increasing by 8.5%. Electric vehicle (EV) giant Nio (NYSE:NIO) and video-sharing platform Bilibili (NASDAQ:BILI) are up 2.5% and 10%, respectively.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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