Xi Jinping, Chinese President, and Joe Biden, then-US Vice President in Beijing in 2013. Lintao Zhang/Pool/Reuters
Alibaba stock rose 10% after US President Biden and China's counterpart headed to a virtual meeting.
Talks could result in a decrease in tensions between economic powerhouses.
This year, Alibaba stock has been affected by Beijing's regulatory crackdown.
Alibaba stock jumped nearly 10% after the announcement that Joe Biden, the US President, and Xi Jinping, the Chinese counterpart, will meet later in this year. This stoked anticipation they would be able to reduce tensions between two of world's most powerful economies.
The shares of the Chinese ecommerce giant rose as high as 9.8% to $158.29, before falling to 8.5%. This push saw the price reach its highest level since mid September.
Retail investors were also interested in Alibaba stock, as Swaggy Stocks showed it coming in second in ticket sentiment on Reddit’s WallStreetBets forum.
According to Reuters, the US and China have reached an agreement in principle that Biden and Xi will meet virtually before 2021's end. The report stated that the US national security advisor Jake Sullivan and Yang Jiechi (China's top diplomat) met face-to–face on Wednesday for the first time since March's unusually public airings of grievances.
Biden has kept key elements of the tough China trade policies that were initiated under Trump's Trump administration since he took office. U.S. Trade Representative Katherine Tai stated Monday that the White House is open to resuming trade negotiations with China, but will maintain high tariffs for the time being.
There have been other issues that have caused tension between the US and China, such as Beijing's threats to Taiwan, its claims for the South China Sea and the treatment of Uighur minorities.
"Investors need to understand that the United States of America and China getting along, and working together, is good for equity market around the world," Naem Aslam (chief market analyst at AvaTrade), wrote in a note.
Alibaba and other US-listed Chinese stocks were also dragged lower over the past year, as Beijing intensified its regulatory crackdown against a wide variety of companies in a campaign for reforming various business and social practices. Gary Gensler, Securities and Exchange Commissioner, stated last month that he does not believe China-related companies provide adequate information about the risks they and American investors face.
China's regulatory crackdown on China has intensified since late 2020 when Jack Ma, founder of Alibaba, made remarks critical of certain Chinese institutions. Under pressure from the government, Ant Group, his financial services platform, pulled an IPO in Shanghai and Hong Kong.
This week, Alibaba stock also seemed to be supported by the news that Charlie Munger, best known for being Warren Buffett's business partner as well as Berkshire Hathaway vice-chairman, has increased his stake in Alibaba. Munger's publishing house Daily Journal increased its stake to 83% last quarter.
