It’s been a roller coaster year for China stocks, marked by exponential gains followed by a sharp nosedive. While the first half of the year was a great time for the markets, stocks began slipping during the second half. By August, markets had reached their nadir, staging a steady recovery over the last two months.
Meanwhile, shares of Alibaba (BABA – Analyst Report) suffered an altogether different fate. Following a spectacular U.S. IPO in September 2014, the stock tanked within the first two months of its debut. It continued to fall over most of the year and has staged a modest recovery only recently.
Even so, it is still in the red for the year while other stocks from China have registered great performances.This is why it may be a good idea to invest in better bets even as the government implements new stimulus measures to boost the economy.
Alibaba’s Fortunes
Within six months of its debut, the Chinese search engine giant had to bear the brunt of a number of allegations and controversies. By March this year, it had been charged for allowing bribery, fraud and illicit behavior as well as fake goods to proliferate on its sites.
During that month, The Wall Street Journal reported that the Chinese e-commerce giant is being beleaguered by “brushers.” This term refers to users paid by vendors to buy their goods online, at a cost, and then write positive reviews about the goods.
In May, luxury brands maker Kering accused the company of scheming in the manufacture and sale of imitations of its products all over the world. By its first anniversary, the stock was trading for less than the $68 IPO price it was issued at. Shares had surged for two months after its IPO to a peak value of $120.
Modest Turnaround
Given its tremendously successful debut, Alibaba has staged a modest turnaround over the last quarter of 2015, gaining 34% since the start of October. The company reported second-quarter fiscal 2016 earnings of 38 cents per share, which exceeded the Zacks Consensus Estimate of 32 cents.
