China stocks enjoy a big, broad rally as Shanghai moves towards lifting COVID lockdown measures

U.S.-listed shares of China-based companies traded notably higher on Tuesday, as investors were emboldened by important steps taken in Shanghai to lift COVID-19 lockdown measures.

The exchange traded fund Invesco Golden Dragon China PGJ,
up 4.6% in morning trade, with more than three-quarters of its active components posting gains to counter weakness in the broader stock market. That sat the ETF (PGJ), composed of US-listed shares of PRC-based companies, on course for highest close since May 4.

Meanwhile, the S&P 500 index is SPX,
lost 0.9% and the Nasdaq Composite Index COMP,
0.8% lost.

The most active component of the PGJ was EV maker NIO Inc.’s stock NIO.
which increased by 4.3%. It is up 18.1% in a four-day winning streak and is up 36.0% since closing at a 22-month low of $12.71 on May 11.

Also trading heavily are shares of KE Holdings Inc. BEKE,
rocketed 10.9% after the real estate transaction platform reported a bigger-than-expected first-quarter loss, but earnings beat forecasts, while e-commerce giant Alibaba Group Holding Ltd. BABA,
increased by 3.2%.

Shanghai authorities said they would take action to reopen Shanghai, China’s largest city, on Wednesday, the Associated Press reported. That fueled investor optimism for a quick recovery in the country’s economy, which is the second largest in the world.

Among some other more active American Depositary Shares (ADS) of China-based companies, Pinduoduo Inc. PDD,
rose 5.9% to a three-month high and rose 38.4% amid a four-day winning streak. Benchmark analyst Fawne Jiang reiterated a buy rating and share price target of $85, up about 66% from current levels, after the mobile marketplace on Friday reported big earnings and revenue increases for its first quarter.

Elsewhere the ADS of iQIYI Inc. IQ,
up 1.8%, Inc. JD,
up 5.7%, DiDi Global Inc. DIDI,
pinned to 0.5%, Tencent Music Entertainment Group TME,
expanded 2.3% and Bilibili Inc. BILI,
increased by 8.6%.

The Golden Dragon China ETF is down 21.9% year-to-date, while the S&P 500 is down 13.6% and the Nasdaq is down 23.1%. China stocks enjoy a big, broad rally as Shanghai moves towards lifting COVID lockdown measures

Brian Lowry

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