Alibaba and other Chinese stocks are rising again. Why long-term profits can be harder.

Chinese stocks rose for a second day on Tuesday after Beijing ushered in stimulus measures that boosted capital markets. While short-term gains will be welcome for Alibaba and others, they cannot overcome the longer-term gloom about China’s economy.

US-listed shares of e-commerce giant Alibaba (ticker: BABA) were up 0.7% in premarket trading on Tuesday, after the stock rose 2.7% on Monday. It was a similar story for rival JD.com (JD), which was up 1.2% in premarket after a 2.6% jump on Monday, as well as electric car maker Nio (NIO).

Chinese stocks rose for a second day on Tuesday after Beijing ushered in stimulus measures that boosted capital markets. While short-term gains will be welcome for Alibaba and others, they cannot overcome the longer-term gloom about China’s economy.

US-listed shares of e-commerce giant Alibaba (ticker: BABA) were up 0.7% in premarket trading on Tuesday, after the stock rose 2.7% on Monday. It was a similar story for rival JD.com (JD), which rose 1.2% in premarket after rising 2.6% on Monday, and electric car maker Nio (NIO) also rose 1.4% in premarket. actions after an increase of 1.8% in the previous session.

Gains in widely held Chinese tech names are representative of a positive day in Asian trading, with that in Hong Kong


Hang Seng index

with a gain of 2%, the


Shanghai composite

rose 1.2%, and that of Tokyo


Nikki 225

moves 0.2% to the green.

Much of China’s gains over the past two days can be attributed to pro-stock market stimulus from Beijing. The Chinese government said this weekend it would cut stamp duty on securities transactions in half from 0.1% to 0.05% — the first cut since 2008 — among other moves to stimulate capital markets.

“For now, this extra help has boosted sentiment. But underlying questions about the fragility of the Chinese economy still remain,” said Susannah Streeter, an analyst at broker Hargreaves Lansdown.
.

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Beijing’s latest actions smack of further short-term stimulus to boost the stock market rather than long-term moves to bolster the world’s second-largest economy. China is facing an economic slowdown that has shaken global markets in recent weeks and weighed down widely held stocks.

While the government has introduced a number of stimulus measures and has signaled more to come, investors so far seem doubtful that this will be enough to reverse the weak growth and ailing real estate sector that threatens the wider financial system.

For companies like Alibaba and JD.com – e-commerce names highly sensitive to the health of Chinese consumers – more substantial stimulus, if any, will be needed to translate into longer-term gains for the stock .

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However, that hasn’t stopped investors from celebrating the short-term boost.

Write to Jack Denton at jack.denton@barrons.com

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