Stocks ended the week on a surprisingly good note, with most major indexes seeing significant gains by the time Friday was over. The best-performing companies were Chinese tech stocks, which entered a rally earlier last week, although these gains are starting to peter out as of Monday’s pre-market trading. The best-performing of which included the Chinese ridesharing giant DiDi Global (NYSE: DIDI), whose shares skyrocketed as traders piled onto the stock.
The main catalyst for this Chinese tech stock jump is an announcement from the Chinese government. At first, the regulators barred DiDi Global from listing on the Hong Kong stock exchange, citing it had failed to meet regulatory requirements about how DiDi would prevent potential security leaks on its platform.
However, it seems that China has reversed its course. Regulators have now said that they would be willing to fully support foreign listings as part of a broader approach to boosting the nation’s economy. Foreign IPOs were just one area the government plans to support, but for Chinese-based tech stocks listed here in America, the announcement was a massive, positive catalyst.
Since then, shares of skyrocketed. DiDi Global soared more than 59% over the course of Friday’s trading session. Other notable companies included Alibaba (NYSE: BABA), Baidu (NASDAQ: BIDU), and Weibo (NYSE: WB), all of which were up between 8-12% over the course of the day.
That’s on top of the previous gains these stocks saw on Thursday. For Alibaba and Baidu, both jumped over 26% and 14%, while DiDi Global jumped by as much as 46% on Thursday as well.
While all of this has been great for Chinese tech stocks, the long-term futures surrounding these companies remains uncertain. On the one hand, gaining more than 40% in a single day isn’t sustainable, especially for a large-cap stock like DiDi Global. The company also posted a $4.7 billion loss during its previous Q3 results, with revenues of $6.6 billion already down from the $7.6 billion reported from its previous quarter.
Prior to all this, many Chinese tech stocks were planning on delisting from American exchanges as well. The turbulent regulatory environment surrounding these companies has gone through a complete 180, and while traders are enjoying the news, many analysts aren’t as optimistic. Out of only two analysts covering the stock, one remains neutral, while the other has a tentative buy rating.
Shares are currently trading down around 8.5% in pre-market trading. Big inter-day moves tend to be followed by reversals as traders lock in their gains. That’s likely what’s going to happen on Monday morning, with Chinese stocks sliding into the red after a weekend to traders to cool off.
Didi Global Company Profile
DiDi Global Inc is a mobility technology platform. It is building four key components of its platform that work together to improve the consumer experience: shared mobility, auto solutions, electric mobility, and autonomous driving. It is a go-to brand in China for shared mobility, providing consumers with a range of safe, affordable, and convenient mobility services, including ride-hailing, taxi-hailing, chauffeur, hitch, and other forms of shared mobility. – Warrior Trading News