On Monday, shares of Alibaba (BABA) +2.44% and JD.com (JD) +4.68% advanced, although the price action did not appear to be driven by sales statistics from the much-observed annual Singles Day event.

In premarket trading in the United States, shares of e-commerce competitor JD.com (JD) gained 3.5%, outperforming futures tracking the S&P 500 (SPX) –0.00% index as well as the tech stock-heavy Nasdaq (COMP) –0.52%. Alibaba was up 2.5% in premarket trade in the United States.

Last week’s Singles Day, often known as China’s equivalent of Black Friday and the greatest single-day shopping extravaganza in the world, was the culmination of annual events held by both businesses. Investors pay particular attention to the results of Singles Day sales, as these results are a significant contributor to the company’s overall revenue during the final quarter of each year.

After several months of decreased consumer spending in China due to severe Covid-19 restrictions, it was anticipated that Alibaba and JD.com would achieve another batch of record sales, even if this would only mean moderate year-over-year growth. This would come after several months during which consumer spending had been depressed. Both firms noted that sales were comparable to the previous year, which raised concerns among investors that both tech giants may have experienced a fall in revenue. However, investors were left perplexed after both companies declined to reveal comprehensive figures for the first time.

On Monday, it might not have an impact on the stock market at all. In Asian trade, the Hong Kong Hang Seng Index (HSI) +1.70% surged 1.7% higher, far surpassing the performance of other key indices around the region, which recorded losses. It is in no way related to the Day of the Single.

Instead, the upbeat action in Chinese stocks generally is linked to positive news on two issues that have been consistent headwinds over the past 18 months: the indebted Chinese property sector and restrictive Covid-19 policies that have weighed on growth. Both of these issues have been a drag on economic growth.

A sixteen-point plan to assist China’s domestic property market and value chain was detailed over the weekend by China’s central bank and the banking and insurance regulator. The plan includes shoring up developer funding and stabilizing troubled asset managers, among other measures. As a result of the development, the Hang Seng Properties Index shot up by 6.8%.

“After several rounds of more meager support, this more comprehensive and centralized approach could mark a turning point,” wrote Mark Haefele, the chief investment officer at UBS Global Wealth Management, in a note that was released on Monday. “With developers set to benefit in particular from the ‘temporary’ easing of bank financing caps,” Haefele continued, “this more comprehensive and centralized approach could mark a turning point.” According to our analysis, this should assist boost general market sentiment on Chinese equities in the very near future.

Following a decision made the previous Friday to remove disruptive Covid-19 regulations, such as mandatory quarantine for inbound tourists and rules surrounding contact trading, the Chinese investor sentiment received a lift as a result of this.

This year, waves of lockdowns in China have severely hampered economic growth in the country. As a result, consumer spending has decreased, and businesses such as Alibaba and JD.com have reported some of the most discouraging quarterly earnings in their respective histories. Even the speculation that these regulations might be loosened has been continuously bullish for the stock market.

In reference to the recently-announced loosening of restrictions, Haefele stated, “The suite of changes is one of the biggest pullbacks from the country’s stringent zero-COVID policy, and we take this as a positive sign that China intends to move towards a more targeted Covid-19 control regime and eventual reopening.” Moreover, “we take this as a positive sign that China intends to move toward a more targeted Covid-19 control regime and eventual recovery.”

However, shareholders would be advised to keep their expectations realistic. The number of people in China diagnosed with coronavirus continues to rise, and the government is not slow to implement lockdowns in an effort to control the virus’s spread.

“We continue to hold the view that a meaningful reopening, which we define as a permanent end to snap lockdowns and other domestic mobility curbs, will most likely take place in [the third quarter of 2023],” Haefele said. “We define a meaningful reopening as an end to snap lockdowns and other domestic mobility curbs.”

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