US-listed shares of Chinese companies, including e-commerce giant Alibaba Group Holding Limited (BABA) and online retailer PDD Holdings, Inc. (PDD), are trading slightly lower on Monday. This dip follows the release of weak economic data over the weekend, painting a concerning picture for China’s economic outlook.
The data, released on Saturday, revealed that factory output, consumption, and investment in China all slowed more than anticipated. Adding to the gloomy picture, the jobless rate unexpectedly climbed to a six-month high. To make matters worse, home prices fell at the fastest pace in ten years, raising concerns about the possibility of the world’s second-largest economy falling into a deflationary spiral.
Despite a string of interest-rate cuts, private confidence remains weak, according to credit data released last week. Recognizing the urgency of the situation, the People’s Bank of China indicated last week that it will prepare additional stimulus and policies to revive the flagging economy.
While mainland China markets are closed for the Mid-Autumn festival holiday until Wednesday, Hong Kong markets were open and closed slightly higher on Monday after a choppy session.
The grim economic data isn’t the only factor contributing to the decline in Chinese stocks. Last Friday, the Biden administration announced significant tariff hikes on Chinese goods, including a 100% duty on electric vehicles, 50% on solar cells, and 25% on steel, aluminum, EV batteries, and key minerals. These increased tariffs, set to take effect on September 27, are expected to further impact the Chinese economy.
Shares of Chinese EV companies, including NIO, Inc. (NIO) and Li Auto, Inc. (LI), are also trading lower, reflecting both the increased tariffs and the bleak economic data from China. PDD Holdings, the parent company of Temu, is also experiencing a decline in its share price after the White House announced new measures on Friday aimed at tackling the abuse of the de minimis exemption by Chinese e-commerce platforms.
As of Monday’s market close, US-listed Alibaba Group shares are down 1.5% at $83.42, PDD Holdings shares are down 0.93% at $94.11, Nio shares are down 2.22% at $5.42, and Li Auto shares are trading 1.78% lower at $18.78. It remains to be seen how the ongoing economic challenges and trade tensions will continue to shape the performance of Chinese stocks in the coming weeks and months.
