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Investing.com -- Shares of Alibaba (NYSE:BABA) Group Holding Limited (NYSE: BABA) plummeted 11% during the trading session, as broader emerging-market stocks took a hit following new US restrictions on Chinese investments. The downturn in Alibaba’s stock came amidst a selloff in Chinese technology companies, with the KraneShares CSI China Internet ETF falling 6.5% and the iShares China (TSX:XCH) Large-Cap ETF dropping 3%.
The sell-off in Chinese equities, including a 4% decline in Baidu (NASDAQ:BIDU) and a 9% drop in PDD Holdings, was largely driven by President Donald Trump’s executive order aimed at curbing Chinese spending in strategic US sectors such as technology and energy. The order, which also called for Mexican tariffs on Chinese imports and proposed fees on Chinese-made commercial ships, has narrowed the scope for China in trade tariff negotiations.
Additionally, domestic challenges within China, including tightening liquidity and a rise in money-market rates, have compounded concerns for investors. The People’s Bank of China’s (PBoC) hesitation to ease monetary policy despite these pressures has led to increased bearish sentiment. The lack of follow-through on policy pledges by Chinese authorities has further exacerbated the situation.
Alibaba’s significant investment pledge of over 380 billion yuan ($53 billion) in AI infrastructure over the next three years was overshadowed by the broader market dynamics.
Investor sentiment has been dampened by the escalating economic tensions between the US and China, as well as internal financial strains within China itself.
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