Alibaba, Baidu, JD NIO, and Li Auto Stocks Decline Amid AI Chip Sanction Concerns

US-listed Chinese stocks, including Alibaba Group Holding (BABA), Baidu, Inc (BIDU), JD.com, Inc (JD), PDD Holdings Inc (PDD), NIO Inc (NIO), Li Auto Inc (LI), and XPeng Inc (XPEV), are experiencing declines as geopolitical tensions rise between Washington and Beijing regarding a potential embargo on artificial intelligence technologies.

Concerns have emerged that Nvidia Corp (NVDA) and other chip manufacturers may face restrictions on their AI chip exports to China. If implemented, these semiconductor sanctions could significantly limit Nvidia’s ability to ship its products to countries like China.

The situation is further complicated as the US government has blacklisted certain Chinese companies, including major players like Tencent Holdings (TCEHY) and the electric vehicle battery manufacturer Contemporary Amperex, primarily due to national security concerns.

Market sentiment is shaky, with traders remaining apprehensive about China’s economic recovery. Previous domestic stimulus efforts have been insufficient in boosting optimism, and the prospect of semiconductor sanctions adds to the pressure.

Edith Qian from CGS International has highlighted the anticipated volatility for Chinese stocks in the first half of the year, especially with the intensifying US-China tensions as President-elect Donald Trump takes office on January 20.

In recent developments, Hong Kong’s stock market has suffered a loss of approximately $118 billion in market capitalization over the week. Additionally, China’s central bank has decided against purchasing more government bonds in an attempt to stabilize the depreciation of the yuan.

The strength of the US labor market is also affecting investor behavior, leading to hesitation regarding potential Federal Reserve rate cuts, which dampens overall stock appeal.

For investors looking to gain exposure to Chinese companies, options include the iShares China Large-Cap ETF (FXI) and the KraneShares CSI China Internet ETF (KWEB).

Also:

• Chinese Stocks Drop as Manufacturing Growth Slows and Geopolitical Tensions Rise

Photo: Shutterstock

stocks, China, AI