Despite declines of a third or more in market value, some of China’s Internet darlings are trading at levels seen as recently as three months ago. Tencent, for example, is back where it was Dec 5. — Reuters
As recently as a month ago, investors in China’s Internet stocks were clutching on to the belief that these companies would sail through the coronavirus epidemic unscathed. Alibaba Group Holding Ltd, for example, was trading near historic highs despite the e-commerce giant’s chief financial officer admitting days before that its biggest business would decline as a result of the squeeze on consumer spending. By the time Baidu Inc reported two weeks later, shares of the search-engine provider had lost 11.7%, while those of Alibaba were down 6.4% and social media powerhouse Tencent Holdings Ltd had slipped 6.2%.
Just as investors should have known in mid-February that there was trouble ahead, they’d be well-advised to look at the reality that’s presented to them now and be just as circumspect. China may have gotten past the worst of Covid-19, but the world is just starting to grapple with it and a major economic shock is looming.
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