Why Alibaba Shares Raised Today

What happened

Actions of Ali Baba (NYSE: BABA) gathered today as tensions between the United States and China thawed after President Joe Biden and Chinese President Xi Jinping agreed to hold a virtual summit. In addition, Charlie Munger Daily newspaper (NASDAQ: DJCO) revealed in a file earlier this week that it had increased its stake in Alibaba by 83%.

As of 12:21 p.m. EDT, China’s tech stock was up 9.3%.

So what

Chinese stocks are often sensitive to geopolitical events, and news that Biden and Xi will meet later this year could signal a thaw in China-US relations. The Trump administration has attempted to pressure China through a trade war, and Biden appears to want to relax some of the tariffs imposed during the Trump years. In addition, some investors fear that Alibaba will be delisted from the US stock exchanges. The summit could help take this issue off the table. The meeting agenda has not yet been set, but it is a step in the right direction for better relations.

Separately, a document released Tuesday showed that the Daily Journal, of which Munger is chairman, bought nearly 150,000 shares of Alibaba in the third quarter, increasing its stake in the company by 83%. Munger, who is the vice president of Berkshire Hathaway and Warren Buffett’s closest associate, has openly declared his support for Alibaba, and the Daily Journal’s stake now stands at nearly $ 50 million.

Now what

For a nearly 10% move in a mega-cap stock, the news isn’t particularly significant. There is no change in Alibaba’s business fundamentals or in China’s strengthening regulatory framework, which is the main reason the stock is down 50% from its highs a year ago. is one year old.

Chinese stocks have been particularly volatile in recent months due to government crackdown, but the prospects of a more favorable US-China relationship could help turn the tide. Investors should keep an eye out for the next high.