U.S.-listed Chinese tech stocks fell, led by Alibaba Group Holding Limited (NYSE:BABA), after a steep drop in China’s industrial profits and fresh geopolitical risks rattled investor confidence in the sector.
Alibaba shares slid about 2.5% on Monday as investors weighed signs of mounting economic stress in China and rising geopolitical tension, CNBC’s Fast Money traders said Tuesday.
The decline followed weekend data showing Chinese industrial profits fell more than 13% in November, marking a sharper drop than the prior month and reinforcing concerns about slowing growth despite Beijing’s plans to boost consumer spending.
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Peers Decline As Geopolitical Risks Rise
Other major Chinese stocks, including Tencent Holding Ltd. (OTC:TCEHY), PDD Holdings Inc. (NASDAQ:PDD), and JD.com Inc. (NASDAQ:JD), also traded lower, while China’s naval drills near Taiwan added to investor unease, CNBC Fast Money traders said.
Despite those risks, some traders argued the market may be overlooking value.
They said Alibaba and other large Chinese tech stocks have pulled back from fall highs and now trade at attractive valuations, even as geopolitical concerns, especially around Taiwan, continue to hang over the sector.
One trader said China-related risks have existed for years and that investors who focused only on them missed a major rally.
Others pushed back, noting that uncertainty surrounding China’s economy, leadership decisions, and U.S.-China relations makes the stocks difficult to own on a day-to-day basis.
Traders highlighted deflation in China, unresolved trade tensions, and restrictions on chip sales as ongoing headwinds.
Technical Setup Draws Interest
Still, several panelists noted that big Chinese tech stocks and China-focused ETFs have outperformed the S&P 500 this year, and technical analysts on the show said Alibaba’s chart is approaching levels that could attract buyers looking for a strategic entry point once short-term pressures ease.
From a technical perspective, traders said Alibaba’s chart is approaching key retracement levels that could attract buyers. While geopolitical risk, cooling AI enthusiasm, and fading cloud-related optimism have created a “perfect storm” for the stock in the short term, several panelists said they would look to reenter once those pressures ease and investor confidence improves.
Year-To-Date Performance Snapshot
Alibaba stock gained over 75% year-to-date, topping the S&P 500 index’s over 17% returns, buoyed by the AI frenzy. Tencent stock gained over 44%, and PDD gained 17%. JD.com lost 15%.
iShares China Large-Cap ETF (NYSE:FXI) gained 26% year-to-date.
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