Chinese ETFs gain momentum as Alibaba plans $25 billion share buyback


Alibaba (NYSE:BABA) climbed on Tuesday, lifting China’s country-specific exchange-traded funds, as the Chinese internet giant increased its share buyback plans to reassure investors.

Tuesday, the Invesco Golden Dragon China ETF (PGJ) increased by 8.1%, the iShares China Large Cap ETF (NYSEArca:FXI) grew by 4.4%, and the SPDR S&P China ETF (NYSEArca: GXC) increased by 3.4%. In addition, Internet-related links KraneShares CSI China Internet ETF (KWEB) increased by 8.0% and the Emerging Markets Internet & E-Commerce ETFs (NYSEArca: EMQQ) was 5.8% higher.

Meanwhile, Alibaba shares jumped 11.0%. BABA is 8.7% EMQQ, 8.4% PGJ, 6.9% GXC and 6.1% KWEB.

Alibaba’s takeover plans are worth up to $25 billion, which is a significant amount given the company’s total market capitalization of around $270 billion, the Wall Street Journal reports.

The e-commerce giant’s share buyback plans were “a sign of confidence in the company’s continued growth going forward,” Alibaba said in a statement.

Citigroup analysts calculated that the expanded buyback plan was “probably the largest share buyback program ever in China’s internet sector” and suggested that Alibaba management viewed the current share price as under-priced. valued and attractive.

The China Securities Regulatory Commission (CSRC), the stock market watchdog, has encouraged listed companies to buy back shares and asset management companies to subscribe to their own fund shares after recent declines, reports the South China Morning Post.

The CSRC also said it had taken steps to resolve the delisting risk of Chinese companies trading in the United States, which triggered the latest round of selling.

“It’s a set of policies that are helpful in fixing overly pessimistic investor sentiment,” Li Lifeng, a strategist at Huaxi Securities in Shanghai, told the South China Morning Post. “Given that the policy bottom is in place, the market bottom is in sight.”

Shares of Chinese tech companies have recently seen extreme volatility on fears that US regulators could delist the companies as early as 2024 and signs that Beijing may continue to crack down on its financial markets.

However, Chinese markets rebounded from the sharp declines, following steps taken by regulators to stabilize financial markets.

BlackRock Inc. fund managers even argued that Hong Kong-traded stocks have become “extremely attractive” after recent declines, Bloomberg reports.

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