“Zero COVID,” after a while, started looking like “Zero Economy” in China. Perhaps sensing trouble ahead, China pulled back on its stranglehold a bit. In aid of that, the Chinese government dialed back on Zero COVID and dropped requirements for quarantine from international arrivals. Thanks to this relaxing of standards, Alibaba (NASDAQ:BABA), JD.com (NASDAQ:JD), and Baidu (NASDAQ:BIDU) all saw gains in Tuesday afternoon’s trading.
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China spent much of the last three years sealed off from much of the outside world. With COVID-19 infections spiking in the country, and the economy suffering, China announced it would retract those harsh border controls. With that came an end to mandatory quarantine for anyone visiting from overseas. The quarantine was in open decline for months, going from three weeks to one week and then to five days. Soon, there will be no quarantine period at all.
The major Chinese stocks, therefore, are rallying on the strength of a possible return to something that looks like normal circa 2019. Trade seems back on the table, which sent stocks related to the consumption of goods and services up in the U.S. markets as well. China also plans to offer direct financial support to COVID-19-hit businesses and to “encourage” the purchase of appliances and vehicles.
Overall, both Alibaba and JD are considered Strong Buys by analyst consensus, while Baidu is merely a Moderate Buy. Alibaba’s average price target of $135.56 per share implies 51.89% upside potential, while JD.com’s $82.31 price target gives it 40.53% upside potential. Meanwhile, Baidu may see 30.46% gains thanks to its average price target of $150.95 per share.
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