China’s leading firms, Alibaba Group Holding Ltd. and Tencent Holdings Ltd., have reported lacklustre financial results for the latest quarters, reflecting the mounting economic and geopolitical challenges weighing on the industry. The disappointing numbers underscore these economies’ hurdles as they navigate slowing domestic growth and strained international relations.
Tencent, known for its gaming and social media dominance, reported slower-than-expected growth. Similarly, Alibaba, an e-commerce giant, struggled to regain its once-in-a-time prominence despite ongoing efforts to revamp its business structure and expand globally. These underwhelming performances have left investors in doubt about whether to invest in these companies.
In the past few weeks, the biggest tech companies erased $41 billion in market value, while a gauge of sector stocks listed in Hong Kong has fallen into bear market territory. On Friday, the decline in Chinese stocks intensified due to apprehensions about Donald Trump’s potential return, combined with mounting dissatisfaction over Beijing’s slow implementation of fiscal stimulus measures. Investors hoping that major tech earnings reignite market enthusiasm face disappointment this season.
Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis, said the business environment “is not only much worse than five years ago, it’s worse than even when China started the Covid Zero policy in 2022. This sector is obviously supported by China’s industrial policies and intent on winning the tech race with the US, but at the same time, it’s a problematic sector.”
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For now, the industry’s ability to win back investors will likely depend on strategy adjustments and favourable policy support.
