BABA Breakout as Beijing Signals Stimulus
China’s latest monetary policy shift has set the stage for renewed optimism in US-listed Chinese stocks. For Alibaba (BABA), this could mark the beginning of a turnaround, as stimulus-driven momentum starts to reignite investor confidence.
A Rollercoaster Ride for BABA
Alibaba’s share price has been on a rollercoaster ride in recent months. The stock surged in September, buoyed by initial stimulus measures, only to lose steam as economic data faltered and Alibaba Pictures delivered weak results. What followed was a steep retracement of nearly 30%, with broader concerns over waning Chinese consumer demand compounding the pressure.
By late November, BABA was clinging to its 200-day moving average, with a descending trendline reflecting a market hesitant to price in immediate growth. The pullback underscored lingering doubts over whether Beijing’s earlier efforts would be enough to revitalise the economy.
The Breakout: A Shift in Momentum
Monday brought a much-needed catalyst. The Politburo, China’s top decision-making body within the Communist Party, announced a shift to a “moderately loose” monetary policy — a stark departure from 14 years of “prudent” guidance. This group, led by President Xi Jinping, sets the economic and policy agenda, making its decisions a critical barometer for investor sentiment.
The market reaction was swift. Alibaba surged nearly 8%, breaking above its descending trendline. Volume soared, adding weight to the breakout and fuelling hopes that the sentiment tide might be turning.
BABA Daily Candle Chart
Past performance is not a reliable indicator of future results
Why This Matters for BABA
Alibaba’s extensive reach across China’s economy — spanning e-commerce, cloud computing, and logistics — positions it uniquely to benefit from policies aimed at boosting domestic consumption. As Beijing commits to expanding household spending and enhancing demand, BABA could gain a direct uplift in its core operations.
The upcoming Chinese Central Economic Work Conference is expected to clarify how these fiscal and monetary adjustments will be implemented. Market participants will particularly watch for measures aimed at restoring private sector confidence and encouraging discretionary spending.
BABA’s Path Forward
Alibaba’s breakout above its descending trendline is a positive signal, but caution remains warranted. The stock still trades below its 50-day moving average, a key technical hurdle. Meanwhile, the broader economy faces structural challenges that could temper the pace of recovery.
Sustained follow-through from Beijing will be essential for BABA to capitalise on this renewed momentum. For now, the breakout represents a fresh start, but the next few months will reveal whether the recovery has the legs to take BABA to new highs.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.67% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
A Rollercoaster Ride for BABA
Alibaba’s share price has been on a rollercoaster ride in recent months. The stock surged in September, buoyed by initial stimulus measures, only to lose steam as economic data faltered and Alibaba Pictures delivered weak results. What followed was a steep retracement of nearly 30%, with broader concerns over waning Chinese consumer demand compounding the pressure.
By late November, BABA was clinging to its 200-day moving average, with a descending trendline reflecting a market hesitant to price in immediate growth. The pullback underscored lingering doubts over whether Beijing’s earlier efforts would be enough to revitalise the economy.
The Breakout: A Shift in Momentum
Monday brought a much-needed catalyst. The Politburo, China’s top decision-making body within the Communist Party, announced a shift to a “moderately loose” monetary policy — a stark departure from 14 years of “prudent” guidance. This group, led by President Xi Jinping, sets the economic and policy agenda, making its decisions a critical barometer for investor sentiment.
The market reaction was swift. Alibaba surged nearly 8%, breaking above its descending trendline. Volume soared, adding weight to the breakout and fuelling hopes that the sentiment tide might be turning.
BABA Daily Candle Chart
Past performance is not a reliable indicator of future results
Why This Matters for BABA
Alibaba’s extensive reach across China’s economy — spanning e-commerce, cloud computing, and logistics — positions it uniquely to benefit from policies aimed at boosting domestic consumption. As Beijing commits to expanding household spending and enhancing demand, BABA could gain a direct uplift in its core operations.
The upcoming Chinese Central Economic Work Conference is expected to clarify how these fiscal and monetary adjustments will be implemented. Market participants will particularly watch for measures aimed at restoring private sector confidence and encouraging discretionary spending.
BABA’s Path Forward
Alibaba’s breakout above its descending trendline is a positive signal, but caution remains warranted. The stock still trades below its 50-day moving average, a key technical hurdle. Meanwhile, the broader economy faces structural challenges that could temper the pace of recovery.
Sustained follow-through from Beijing will be essential for BABA to capitalise on this renewed momentum. For now, the breakout represents a fresh start, but the next few months will reveal whether the recovery has the legs to take BABA to new highs.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.67% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.