Chinese stocks trading on US exchanges continued to struggle today amid broader economic concerns in the country and rising COVID cases.
In fact, the Nasdaq Golden Dragon China Index, which tracks many popular stocks, fell 7.3% today and hit its lowest mark in roughly nine years, according to Bloomberg.
Shares of the large e-commerce company Ali Baba (BABA -6.64%) fell roughly 6.6% today, while shares of the digital freight company Full Truck Alliance (YMM -6.79%) fell close to 7%. Meanwhile, shares of the real estate platform KE Holdings (BEKE -8.05%) ended the day down more than 8%.
Earlier this week on Monday, Chinese stocks performed well after China’s President Xi Jinping said at the Chinese Communist Party’s National Congress that there would be a strong emphasis on making China more of a prominent technological player in the world.
However, Jinping did not seem to address current concerns around the economy, which has slowed this year, largely due to policies put into place to prevent the spread of COVID-19 in the country, such as lockdowns, which have been particularly difficult on the economy.
China this week also delayed the release of key economic data such as third-quarter gross domestic product (GDP) growth, which was expected to have been around 3.4%, according to a Reuters poll.
However, Bruce Pang, chief economist in Hong Kong for Jones Lang Lasallesaid “the delayed economic data release is not because of bad economic recovery but the ongoing Congress, as authorities want media and the public to concentrate on the key messages delivered by the big event.”
But investors today continue to be nervous about the economy. After all, The World Bank only expects China’s GDP to grow 2.8% this year, while the Chinese government had initially promised 5.5% growth coming into the year.
Rapidly spreading COVID cases also continue to be a concern for the country. Cases in Beijing recently hit a four-month high, while more than 1 million people in the city of Zhengzhou went into lockdown earlier this week.
And at the National Congress this week, Jinping not only indicated that his COVID policies would continue but also defended them.
“We have put people first and put lives first, and upheld ‘dynamic COVID zero’ without wavering,” he said, according to Bloomberg.
Alibaba, Full Truck Alliance, and KE Holdings have all seen their stocks heavily sold off this year. Each company has strong potential, given their massive reach and huge market potential in China.
Alibaba reached more than 1 billion users across all of its businesses earlier this year. In 2021, more than 3.5 million truckers used Full Truck Alliance to fill shipping orders, and there were 43 million monthly active users on KE Holdings’ platform at the end of the second quarter of this year.
Still, Chinese stocks can face a heavily regulated environment and fall victim to the ups and downs of the economy like anywhere else. I think there’s good potential in each of these names, but it won’t come overnight, and there could be lots of volatility along the way,
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.