Alibaba Stock Slumps to $147.50 in 2023 Amid Rising US-China Trade Conflicts
Alibaba shares plunged over 4% following China's strategic renminbi devaluation, intensifying trade tensions with the US. Despite the downturn, analysts remain optimistic about Alibaba's growth potential.
China's Renminbi Devaluation Fuels Trade War Fears
Alibaba Group Holding Limited (BABA) experienced a significant drop of more than 4% on Monday after China devalued its currency, escalating the ongoing trade conflict with the United States. The renminbi fell below the critical 7:1 exchange rate against the US dollar early Monday, a move widely interpreted as retaliation against newly imposed US tariffs announced last week. This currency adjustment aims to make Chinese exports more affordable globally, thereby enhancing their competitiveness against American products.
Despite these challenges, Jefferies initiated coverage on Alibaba with a strong Buy rating and set a price target of $216 per share. Analyst Thomas Chong highlighted Alibaba's robust cash flow from its core marketplace and multiple growth catalysts in the years ahead. He emphasized that Alibaba benefits from China's rising consumption, particularly in lower-tier cities and expanding local services, positioning it well for sustained secular growth.
From a technical perspective, Alibaba's stock has declined from its July highs near $180 to retest support levels around $147.50, last seen in late May. The Relative Strength Index (RSI) dropped to an oversold 27.07, while the Moving Average Convergence Divergence (MACD) indicates a strengthening bearish trend. These signals suggest a possible short-term consolidation before the stock potentially continues its downward trajectory in the near future.
Investors should monitor whether Alibaba retests the $147.50 support level in upcoming sessions. A breakdown below this point could lead to further declines toward the trendline support near $130. Conversely, a rebound might push the stock toward resistance levels at the 50- and 200-day moving averages, approximately $165, though a near-term recovery appears unlikely.
Note: The author holds no direct position in Alibaba stock, aside from passive index fund exposure.
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