The Lunar New Year holiday not only signifies a break for Chinese investors but also a potential downturn for Alibaba stock. As mainland Chinese markets remain closed for the week, it can impact the performance of the e-commerce and cloud computing giant.
While Hong Kong’s stock exchange, where Alibaba has its non-U.S. listing, reopened on Wednesday, the absence of Chinese economic data and limited corporate and political activity during this holiday period may create a lack of catalysts for Alibaba. However, analysts may keep an eye on travel and consumption data for potential insights.
During the Lunar New Year period, volatility in Alibaba’s U.S.-listed shares tends to be lower than usual, as per Dow Jones Market Data. The average daily percentage change is typically below the stock’s mean level. This is likely due to influential Chinese shareholders taking time off, resulting in other investors potentially selling Alibaba stock.
Despite the Lunar New Year celebrations, Alibaba’s stock performance may face some challenges during this time.
Alibaba Stock Performance during Lunar New Year
Alibaba stock has seen a consistent decline over the Lunar New Year holiday week since its listing in the U.S. According to Dow Jones Market Data, the stock has fallen by an average of 0.8% during this period in the past nine years. Additionally, the shares have retreated another 0.6% on average in the five days following the holiday.
However, when compared to the performance of other U.S.-listed Chinese stocks such as Baidu and XPeng, as well as the broader S&P 500 index, Alibaba’s historical performance during Lunar New Year and the subsequent week has been less impressive.
While it is customary for Alibaba’s stock to decline further during this time, there is a notable difference this year. As of premarket trading on Wednesday, Alibaba’s stock has risen by more than 1%, surpassing market expectations. Overall, the stock has gained 2.5% since the beginning of the Lunar New Year period. In contrast, the S&P 500 index has remained relatively flat during the same timeframe.
Investors should be aware that further declines in Alibaba’s stock are possible but not unexpected. The company has faced challenges in recent times due to China’s economic slowdown and weak consumer spending. Although the Year of the Dragon brings some optimism, it is important for investors to exercise caution when trying to time the market bottom.