Key Takeaways
- Geopolitical and regulatory pressures, including persistent US-China trade tensions and the looming threat of delisting from American exchanges, create a high-risk environment for Chinese equities.
- Key companies like Alibaba are experiencing decelerating growth and have missed earnings expectations, signalling a potential erosion of their fundamental competitive advantage.
- Investor sentiment is notably divergent; despite ‘Strong Buy’ ratings from some Wall Street analysts, domestic investor behaviour suggests a clear trend towards divestment.
- While appearing undervalued on some metrics, the stocks carry a significant uncertainty premium, making current valuations appear more like a value trap than a recovery opportunity.
In the relentless churn of global markets, where indices swing with economic data and geopolitical whispers, a stark undercurrent persists for certain Chinese equities: the notion that divestment remains a prudent choice, irrespective of broader trends. Stocks like Alibaba, JD.com, and PDD Holdings have faced a barrage of headwinds that render holding positions increasingly untenable, turning what might seem like temporary dips into a pattern of sustained erosion.
Geopolitical Tensions Fueling Perpetual Sell-Offs
Escalating trade frictions between the US and China have cast a long shadow over these e-commerce giants, transforming episodic volatility into a chronic affliction. Recent threats of additional tariffs, as highlighted in reports from April 2025, have amplified the pressure, with proposed levies up to 50% on Chinese imports threatening to squeeze margins already under strain. For Alibaba, whose vast ecosystem spans retail and cloud services, such policies could inflate costs and disrupt supply chains, eroding the competitive edge that once propelled its growth. Similarly, JD.com’s logistics-heavy model and PDD’s discount-driven platform face amplified risks, as higher duties on goods could deter US consumers and force price hikes that undermine their low-cost appeal.
Delving into historical parallels, these tariff threats echo the 2018-2019 trade war, when Alibaba’s shares plummeted over 20% in a matter of months amid similar rhetoric. Fast-forward to the current landscape, and the live session data as of 1 August 2025 reveals Alibaba closing at $117.07, down nearly 3% from its previous mark, reflecting intraday lows that brushed $116.11. This isn’t isolated; JD.com settled at $30.91 after a 1.8% drop, while PDD Holdings shed almost 3% to $110.06. Such movements, when viewed against a 52-week range showing Alibaba’s peak at $148.43, underscore a valuation retreat that has shaved off substantial gains, making sales appear opportune even on up days.
Delisting Risks as a Lingering Overhang
Beyond tariffs, the spectre of delisting from US exchanges looms large, a regulatory sword that has dangled since the early 2020s but gained renewed menace in 2025. Policy guidance from Washington, as detailed in Benzinga coverage from April 2025, estimates a potential $250 billion in forced selling if Chinese firms fail to comply with auditing standards. This risk isn’t abstract; it directly imperils liquidity for Alibaba, JD.com, and PDD, whose American depositary receipts form a critical funding avenue. Bloomberg’s May 2025 analysis warns that access to Wall Street could become a bargaining chip in trade negotiations, potentially stranding investors in a limbo of halted trading and value evaporation.
Contextualising this with trailing data, PDD Holdings’ shares have oscillated wildly, with a 52-week high of $155.67 now a distant memory against its current perch around $110. The company’s forward price-to-earnings ratio of 7.81, while seemingly attractive, belies the uncertainty premium baked in by analysts, who rate it a ‘Buy’ at 1.8 on a scale where lower numbers indicate stronger conviction—yet sentiment from verified sources like Yahoo Finance suggests caution amid “persistent valuation premiums” that make holding a gamble.
Earnings Misses and Growth Deceleration
The internal narrative isn’t rosier, with fiscal reports painting a picture of decelerating momentum that justifies a sell-first mentality. Alibaba’s fiscal fourth-quarter 2025 earnings, released in May, missed expectations on both revenue and profit, as per CNBC’s coverage, leading to an immediate share slide. This wasn’t a one-off; it capped a year where gross merchandise value growth stalled, overshadowed by rivals like PDD’s Pinduoduo platform. JD.com, too, grapples with similar woes, its forward P/E of 7.47 hinting at undervaluation, but analyst models from sources like The Motley Fool in May 2025 point to accelerating AI investments that haven’t yet translated to bottom-line relief, leaving earnings per share projections for the current year at a modest 18.66 Chinese yuan.
Working backwards from today’s closes, these stocks’ 50-day moving averages reveal telling drifts: Alibaba’s at $116.22, barely above its session low, while JD.com’s $32.74 average underscores a 5.6% erosion. PDD’s slight uptick to $106.48 over the same period masks a broader 200-day average of $110.30, flatlining in a market craving expansion. Sentiment from professional quarters, such as Schaeffer’s Investment Research in April 2025, labels these as part of a “tech rout” dragged by trade tensions, with double-digit percentage drops in Hong Kong listings mirroring US ADR pain.
Investor Sentiment and Market Dynamics
Verified sentiment indicators paint a grim tableau, with Wall Street’s “Strong Buy” consensus for Alibaba and JD.com—ratings of 1.3 and 1.4 respectively—clashing against local Chinese investor behaviour. Yahoo Finance reports from three weeks prior to 1 August 2025 note domestic offloading of Alibaba shares despite analyst praise, driven by “limited new growth catalysts.” This divergence amplifies the post’s implied thesis: even as global markets rally, these stocks lag, their market caps—Alibaba at $279 billion, JD at $45 billion, PDD at $156 billion—failing to capture upside amid volumes that, while robust at over 12 million for Alibaba, signal more exits than entries on down days.
In a darkly ironic twist, the very resilience touted in some quarters, like export-backed economic signs from InvestmentGuru posts on X around late July 2025, crumbles under consumer demand weakness and property sector drags, sidelining stocks like these in sideways purgatory.
Strategic Implications for Portfolios
For investors, this confluence of factors crystallises a harsh reality: the window for profitable exits narrows with each passing session. Historical filings show Alibaba’s book value at 437.30 Chinese yuan per share, yet its price-to-book of 0.27 screams undervaluation that’s more trap than treasure, given the geopolitical quicksand. Analyst-led forecasts, such as those embedded in forward EPS estimates of 9.87 for Alibaba, assume stability that’s increasingly elusive. PDD’s projected 14.09 EPS offers a glimmer, but model-based extrapolations from sources like Fool.com in May 2025 warn of competitive price wars—evidenced by recent statements from Alibaba, JD, and peers boycotting “disorderly competition,” as noted in Brian Tycangco’s X commentary on 1 August 2025—that could further compress margins.
Ultimately, the data and dynamics converge on a singular point: in an environment where upticks feel fleeting and downturns entrenched, divesting these holdings aligns with a defensive stance, preserving capital against an unyielding tide of adversity.
This article draws context from an X post dated prior to 1 August 2025, highlighting bearish views on $BABA, $JD, and $PDD.
References
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Bloomberg. (2025, May 14). Will Trump Delist Chinese Stocks? Why Alibaba, JD.com Under Threat. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2025-05-14/will-trump-delist-chinese-stocks-why-alibaba-jd-com-under-threat
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