Alibaba and Baidu Stocks Rise. Blame China's Surprise Rate Cut. -- Barrons.com

Dow Jones07-22

By Brian Swint

Some Chinese stocks were getting a boost on Monday from a surprise interest-rate cut from the central bank of the world's second-largest economy.

The People's Bank of China lowered several key rates at once, reducing both short and long-term borrowing costs, after second-quarter growth came in weaker than expected. The ruling Communist Party also finished a once--in-five-years meeting last week. The interest-rate reductions signal an intent to revive economic growth that is still flagging amid a property market slump and a weak recovery from Covid-19 lockdowns.

"The domestic economy is lethargic," said UBS strategist Paul Donovan. "This is a signal of policymakers' concerns over economic growth, and perhaps represents a downpayment on future action."

Retailer Alibaba's American depositary receipts rose 2% in premarket trading. Internet search firm Baidu gained 1.8%, while electric-vehicle maker BYD was up 0.9%. Tencent, another technology company, advanced 3%. The Hang Seng Index in Hong Kong finished the day 1.3% higher.

However, the PBOC's action may have also added to concerns about the economy's expansion. The Shanghai Composite index fell 0.6% on Monday, led by energy stocks.

Write to Brian Swint at brian.swint@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 22, 2024 09:09 ET (13:09 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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