US-listed Chinese stocks experienced a downturn in premarket trading as investors opted to secure profits following a significant rally. The catalyst for the rally was a series of promises from Chinese policymakers to enhance economic growth.
The KraneShares CSI China Internet ETF, which tracks the performance of Chinese internet companies, dropped by 5.1% as of 5:56 a.m. in New York. This decline comes after the ETF saw a substantial 10% surge on Monday, marking its largest single-day increase since September 26. Similarly, the Hang Seng Tech Index in Hong Kong fell by 1.4% after previously gaining 4.3% on Monday.
A broad decline was observed among most internet stocks in Tuesday’s premarket trading, with notable companies such as Alibaba (NYSE:BABA) seeing a 3.6% decrease, Baidu (NASDAQ:BIDU) 4.6%, PDD 4.8%, JD (NASDAQ:JD).com 4.7%, NetEase (NASDAQ:NTES) 4.8%, Trip.com 2.8%, and Bilibili (NASDAQ:BILI) dropping 9.3%.
Attention is now shifting to China’s annual Central Economic Work Conference, anticipated to commence on Wednesday. This focus follows the Politburo's pledge on Monday to adopt "moderately loose" monetary policies and to be "more proactive" with fiscal measures.
Despite the initial positive reaction to the Politburo statement, which spurred a quick uplift in Chinese shares, investors are emphasizing the need for further stimulus measures to be implemented.
Economists at Nomura, including Lu Ting, expressed that while Beijing's policy stance demonstrates a strong commitment to stabilizing growth, including increased fiscal spending for the coming year, they believe that more comprehensive actions are necessary to foster a genuine economic recovery in China.
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