Barron’s has advised brave investors to buy shares of Alibaba Group Holding while other market players may be wary as the Wuhan coronavirus terrorizes financial markets.
“The Chinese government will, in time, regain control of the situation and refocus the bulk of its immense power on strengthening and modernizing the world’s second-largest economy. The economic hiccups caused by the virus should be viewed as short-term distractions that create opportunities for long-term investors to buy shares of Alibaba Group Holding (BABA) at a time when investors are afraid,” Barron’s reported.
“Alibaba is a leading proxy for China’s economic growth. When it became evident that the trade war with the U.S. would end, the stock began to surge in early October, eventually rising some 41%. Yet the Wuhan virus has stripped about 13% off the stock in the past few weeks amid headlines that can make it seem as if the world will soon be subsumed by a lethal virus,” Barron’s Steven M. Sears said.
Alibaba is scheduled to report fourth-quarter earnings on Feb. 13. “The stock could make a sharp move in a short time if earnings are so strong, or the outlook so positive, that it overshadows the Wuhan troubles,” Barron’s reported.
“If you can handle volatility, trading Alibaba into earnings is a solid, concentrated wager. During the past 52 weeks, the stock has ranged from $147.95 to $231.09 and is up 26%, just trailing the S&P 500 index’s 29% gain. It is down about 1% this year,” Barron’s said.
Meanwhile, Alibaba co-founder Jack Ma has become the latest technology industry figure offering to help fight the coronavirus outbreak.
China’s richest man will donate 100 million yuan ($14.5 million) through his charitable foundation, joining Bill and Melinda Gates in pledging assistance, Bloomberg reported. That’s on top of an offer by his Alibaba Group Holding Ltd. to establish a 1 billion yuan fund and share its artificial intelligence expertise with researchers.
“We know that the battle between humanity and disease is a long journey,” the foundation said in a post on its Twitter-like Weibo account. “This money will help various medical research efforts and help disease prevention.”
China’s tech industry has responded rapidly to an outbreak that’s infected thousands and killed more than 150 around the globe. Pony Ma’s Tencent Holdings Ltd. donated 300 million yuan of goods and will provide mapping and data services; ride-hailing giant Didi Chuxing is ferrying medical workers in designated vehicles across certain cities; Robin Li’s Baidu Inc. and TikTok owner ByteDance Inc. are contributing financial aid.
While Ma and his industry have been accused of foisting extreme overtime on its employees, many companies like Tencent have extended the Lunar New Year holidays by a week or more in the wake of the outbreak.
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