U.S.-listed China stocks were big losers in Friday’s trading, including Alibaba (BABA), Baozun (BZUN), Weibo (WB), Sina (SINA), Tencent (TCEHY), Tal Education (EDU) were among the notable Chinese stocks underperforming the S&P 500 index, Nasdaq composite and Dow Jones industrial average. However, one new Chinese IPO, iQiyi (IQ) extended Thursday’s breakout from a short IPO base.
Notable China Stock Decliners
- Alibaba fell 2.2% on the stock market today, sinking back below its 200-day moving average.
- Tencent retreated 3.15%. Its relative strength line, which tracks a stock vs. the S&P 500 index, is at a 2018 low.
- Weibo plunged 6.85%, losing sight of its 50-day line and starting to move toward its 200-day.
- Weibo parent Sina tumbled 5.5%, hitting an eight-month low.
- Baozun sank 6.6%, though it’s still somewhat extended from an early March breakout on strong earnings.
- YY (YY) skidded 5.7% to a five-month low after undercutting its 200-day line earlier in the week.
- Momo (MOMO) lost 2.1% but close above its 50-day and 200-day after testing both intraday.
Autohome (ATHM) was one U.S.-listed China stock that held up reasonably well. Shares of the auto information site fell 2.65%, but from Thursday’s record high. Autohome is well extended from a breakout.
Baozun, Weibo and Tal Education are members of the IBD 50 list and a big reason why that elite list underperformed Friday.
China Stock Sell-Off Trigger Unclear
It wasn’t clear what drove these China stocks lower. China reported a rare trade deficit in March as exports fell, raising concerns about economic growth.
U.S.-China trade war tensions have ebbed for the moment, but these U.S.-listed Chinese stocks aren’t that affected by trade. Alibaba is a Chinese e-commerce giant, but it doesn’t have much exposure to the U.S. itself. That same goes for social site Weibo and for-profit school stock Tal Education.
Chinese social sites do face the risk of running afoul of Chinese censors. Weibo said Friday that it was removing gay and violent content from its site. That comes after Web portal Toutiao pulled an app that regulators said was vulgar.
But Chinese internets try hard to stay in Beijing’s good graces, and act quickly when regulators crack down. Also, censor risks wouldn’t seem to apply to Chinese stocks like Tal or Baozun, which helps Western brands with China e-commerce strategies.
Perhaps China stocks were just out of favor. Whatever the reason, investors need to focus on the price and volume action of specific names, groups and the overall market.
China IPO Keeps Rising
Baidu (BIDU) web streaming unit iQiyi, called the Netflix (NFLX) of China, rose 1.5% to 19.33, hitting a new high. Shares rose 5.4% to 19.04 on Thursday, clearing a very short IPO base with an 18.62 buy point. The 5% buy zone extends to 19.55.
IQiyi not only emulates Netflix in a broad sense, it licenses Netflix content.
As for parent Baidu, shares fell 1.4%, continuing to find resistance at its 200-day line.
