Shares of Chinese retail giants Alibaba (NYSE:BABA) and JD (NASDAQ:JD).com saw a significant surge on Friday as the Chinese government reportedly contemplates loosening restrictions on foreign ownership of companies listed within its borders. This move, aimed at boosting investor confidence, could potentially enhance the attractiveness of stock markets in major Chinese cities such as Shanghai, Shenzhen, and Beijing to international investors.
Alibaba's shares experienced a 3.9% increase in Hong Kong, while its American depositary receipts saw a 4.8% rise in premarket trading. Meanwhile, JD.com also witnessed a 4% uplift in early trading. The speculation has been based on information from unidentified sources familiar with the situation, as reported by Bloomberg.
This decision to ease foreign ownership limits is seen as a potential strategy to foster economic recovery. China's economy has faced challenges after the lifting of pandemic lockdowns at the end of 2022. The world's second-largest economy has set an ambitious target of 5% growth for this year, which may prove challenging to achieve.
The Chinese authorities continue their efforts to stimulate recovery and meet their economic targets amidst post-pandemic challenges. The potential easing of foreign ownership restrictions could serve as a significant step towards this goal, although concrete details and timelines remain uncertain.
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