Several Chinese stocks have been gaining recently after signs that pressures on the country’s technology sector might be easing. Shares of Alibaba Group (BABA) have climbed 26% over the past five days amid signs of Chinese authorities easing their crackdowns and regulatory actions on the sector.
Last year, the issuance of new gaming licenses was paused in China to limit the time that the country’s young population was spending online. This week, the country saw the second round of gaming license issuances, which has buoyed investor sentiment in the stock.
Analyst’s Take
The recent price gains come after BABA stock lost nearly half its value over the past year. Susquehanna analyst Shyam Patil has reiterated a Buy rating on the stock alongside a $185 price target.
Overall, the Street has a Strong Buy Consensus rating on BABA based on 17 Buys and two Holds. The average BABA price target of $159.84 implies a potential upside of 33.62%.
Hedge Funds Raise Their Holdings
Concurrently, TipRanks data indicates hedge funds have increased holdings in BABA by 1.1 million shares in the last quarter, indicating a Positive hedge fund confidence signal. Moreover, Ray Dalio’s Bridgewater Associates has increased its holding in the stock to $813.9 million.
Closing Note
After a massive beating, Chinese names are finally having their moment in the sun. Although positive regulatory cues are a catalyst, more actions may be needed to keep investor sentiment buoyant in BABA.
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