Alibaba Stock Is Rallying After China Moves to Ease Lockdown Measures

Shanghai has been under lockdown since March. The government’s severe response to a Covid-19 resurgence has rattled global supply chains, stoked inflation and led to a slowdown in the Chinese economy.

While the news that some restrictions will end has been cheered by investors, risks remain.

“The devil is in the detail of course,” said Jeffrey Halley, an analyst at broker Oanda. He pointed to challenges still faced by workers in commuting and the reality that coronavirus only has to break through again for China’s “zero Covid” policy to trigger more lockdowns.

“Such minutiae are usually ignored by markets when it doesn’t suit the preferred narrative, and so it is today,” Halley said. “Asia is pricing in peak virus in China and a recovery in growth.”

For Alibaba, any inkling that the latest round of Covid-19 lockdowns are ending would be welcome news. 

Shares in the company lost almost 50% of their value last year amid a regulatory crackdown from both Beijing and Washington on U.S.-listed Chinese tech companies, and Alibaba has fared like other tech stocks in 2022—badly. 

Alibaba’s U.S.-listed stock is down more than 20% so far this year, and analysts have been slashing their price targets on the shares amid the Covid-19 situation in China. More so than its competitors, Alibaba is highly reliant on discretionary spending—whether that be from merchants advertising on their platforms or consumers buying luxury goods or electronics.

Write to Jack Denton at jack.denton@dowjones.com