What Is Going On With These Surging Tech Stocks?

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JD.Com Inc (ADR) (NASDAQ:JD) and Yahoo! Inc. (NASDAQ:YHOO) jumped by 4.7% and 3.2%, respectively, on the back of the news that sparked the appreciation of Alibaba’s stock. Because Yahoo! Inc. (NASDAQ:YHOO)’s other operations are not very profitable, the vast majority of Yahoo stock’s value is in its equity position in Alibaba shares, and Yahoo’s stock is closely correlated to Alibaba. Because of relative valuation, JD.Com Inc (ADR) (NASDAQ:JD)’s shares are up a similar amount to Alibaba, as JD.com also benefits from the same macro-economic policy of easing Chinese interest rates. If lending costs are lower, Chinese consumers will have more discretionary spending power and they will spend more on JD.com’s e-commerce products. The one two punch of easing rates and reserve requirement cuts also means the Chinese government is on the job in terms of doing what it takes to preserve growth. If China’s long term growth can stay above 5-6% a year, JD.com, Alibaba.com, and Yahoo will all be great investments.

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Disclosure: none

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