Alibaba, JD.com stocks higher as China prepares for new stimulus round

Shares of Alibaba (BABA) and JD.com (JD) are higher in early trading as China is preparing for a new round of stimulus to support the country's economy, according to a report from Bloomberg.

Yahoo Finance's Brad Smith and Seana Smith discuss the news and what it means for China. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

BRAD SMITH: Everyone, we also want to take a quick look here at shares of Alibaba today. They are higher as of right now after the opening cross. You're seeing them up here in the US by about 1.7%. JD is moving as well here. This comes as China reportedly prepares a new round of measures to support its economy. That's according to a Bloomberg report out this week. Policy makers considering issuing at least 1 trillion yuan or about $137 billion of additional sovereign debt for infrastructure projects here.

Now, this would likely benefit, or at least, expected by investors to benefit companies in the e-commerce landscape like JD.com, like Alibaba as well. It's also interesting as part of this too, you're seeing more of a vocal tenor around some of the Chinese ministries, looking towards where they can make additional investments around AI.

Alibaba would also be a significant player in that given that they've got what I believe is called the Ernie Bot right now that is their AI play. And so specifically, a few different areas of investment or at least, injecting more capital into the economy and infrastructure plans where Alibaba, excuse me, could be a beneficiary here.

SEANA SMITH: Yeah, certainly. And there would be, if this report, in fact, is true, and Chinese officials do follow through with this stimulus, that could be a boost more broadly speaking not just Alibaba, and not just JD.com, but even multinational companies with large exposure in China where some of their sales have been pressured in theory. If this injection does come through and we do see the economy return to a bit of a faster growth than we had been anticipating, certainly a number of companies with exposure to China could benefit here down the line.

But it's important to note that if, in fact, we do see the stimulus effort from China, this would be a shift in the stance that we have seen so far from the government who has avoided some of these broader fiscal stimulus measures so far. So I think it also brings up some questions just about how dire the situation is there, and what is necessary in order to boost the economy going forward.

BRAD SMITH: And the timing is amazingly critical here. You think about the next few weeks and how critical that is, especially for the consumer eye and those dollars or yen, and spending there because we're leading up to what is the core consumer Prime Day analogous type of event, which is Singles' Day that takes place in China. And 11.11, typically, when you see some of these major deals, promotional sales, discounts on Alibaba, on JD.com.

And so if that stimulus were put into effect prior to that, the amount of that would potentially cascade into Alibaba's marketplace or JD.com certainly going to be a focus for investors to keep an eye on here.