Today’s traders are talking about Alibaba (NYSE:BABA), but not due to anything company-specific. Rather, it’s because China may be loosening its Covid-19 restrictions again. However, this isn’t based on confirmed facts, but only on rumors that are circulating on social media. Nevertheless, investors are excitedly pushing the BABA stock price higher.
As you may be aware, China’s government hasn’t always made it easy for Alibaba to conduct its business. For instance, authorities put the kibosh on Alibaba’s Ant Group’s initial public offering (IPO) in 2020.
On top of that, Beijing has imposed restrictions on Chinese businesses through cybersecurity crackdowns and strict zero-Covid policies. There have also been international tensions, as the U.S. Securities and Exchange Commission (SEC) placed Alibaba on a list of Chinese companies that might lose their U.S. exchange listing.
Without a doubt, Alibaba’s downtrodden investors could use some positive news right about now. Even if it’s only based on rumors and not hard data, a bit of encouragement could send the Alibaba share price much higher.
What’s Happening With BABA Stock?
In fact, there have been rumors, and those seem to be moving BABA higher, to the tune of 5% to 6% today. Many traders probably caught wind of this through a report from the Wall Street Journal.
According to the Journal, rumors recently “circulated on social media that China was considering easing its strict Covid-19 policies.” Apparently, an anonymous post circulated on Chinese social media, claiming China’s government “was considering easing Covid-19 restrictions in March.”
The impact on China’s major stock market indices was immediate. The Hang Seng index rose 5.2%, while the Shanghai Composite moved up 2.6%.
Before jumping headlong into the trade, however, investors should consider the source of the rumors — or the lack thereof, since the source is anonymous. As the old saying goes, the market will often “buy the rumor” and then later on, “sell the news.”
Still, some traders are eagerly buying BABA stock today based on the possibility of Beijing relaxing its Covid-19 restrictions. Hopefully, they won’t get trapped by a potential “sell the news” moment of disappointment.
On the date of publication, David Moadel 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 InvestorPlace.com Publishing Guidelines.
