Before the bell: Hong Kong Scores Big

Chinese Tech Stocks Soar While Wall Street and European Markets Struggle

The S&P 500 (-0.4%) and Nasdaq (-0.5%) both lost ground yesterday. While Merck (+2.4%) and Johnson & Johnson (+1.1%) managed to climb higher, and Quantum Computing (+1.6%) extended its impressive rally, the market was largely dominated by losers. Hasbro (+13%) was an exception, posting excellent results, but American Express (-2%), Boeing (-2.8%), Goldman Sachs (-3.9%), and JP Morgan (-4.5%) all took a hit. The most notable decliner was Walmart (-6.8%), despite strong earnings. The retail giant reported a 4.1% increase in revenue and a 10% rise in profits, but its forecasted earnings growth of just 4.5% for the year left investors unimpressed.

Fortunately, Alibaba (+8.1%) provided some relief, exceeding expectations across the board. European markets were relatively flat, while in Brussels, Melexis (+3.6%) outperformed, whereas Kinepolis (-2.5%), Deceuninck (-2.5%), and Fagron (-3.6%) struggled. In Paris, Carrefour (-8.8%) plummeted due to disappointing earnings and a weak outlook.

This morning, Japanese markets remain unchanged, but in Hong Kong, investors are celebrating. The Hang Seng Index is up a stunning 3.3%, fueled by Alibaba’s 12.7% surge. Other major Chinese tech stocks, such as Tencent (+2.9%) and BYD (+4.6%), are also rallying. With China’s tech sector gaining momentum, perhaps it’s time for analysts to come up with a catchy nickname or “Magnificent” club for these giants. After all, not all innovation and big profits come from Silicon Valley.

Later today, we’ll see reports on business confidence from both the Eurozone and the U.S., while Cofinimmo and Kingspan are set to release earnings.

The Struggling Consumer

It’s no coincidence that Carrefour (-8.8%) and Walmart (-6.8%) both suffered significant losses. One represents the European consumer, the other the American shopper. When customers spend freely, supermarkets thrive, but when they tighten their belts, the impact is felt first in revenue, then in profits.

The message is clear: both retail giants, experts in consumer psychology, expect shoppers to be more cautious this year—at least when it comes to groceries. A mix of frugality, low profit margins, weight-loss drug trends, and import tariffs is making the supermarket sector increasingly unattractive. If that’s the case, the same logic might apply to Nestlé, Unilever, and Procter & Gamble—traditionally seen as defensive stocks. But defensive? Not right now. Consumers are holding back, and perhaps so should investors.

Long Live Alibaba!

It’s hard to imagine any serious investor without Alibaba in their portfolio. It’s rare for all three of us—Jan, Stefan, and Pascal—to agree on a stock, but last year we all saw Alibaba as a clear opportunity. Even after its recent rally, the stock remains undervalued.

Alibaba is notably absent from most institutional and private portfolios, which is why we see days where the stock jumps 8.1% on Wall Street and 12.7% in Hong Kong. No surprise to us. However, the market seemed genuinely impressed by its earnings beat. Net quarterly profit reached 6.7 billion euros—20% higher than expected. Every business segment performed well, and we believe Alibaba’s cloud services and AI innovations will drive even greater growth in the future.

Did You Know That…

Yesterday, Materialise plunged 35.4% on the Nasdaq? Over the past five months, the Leuven-based 3D printing specialist had soared 98%, but after disappointing revenue figures and a quarterly operating loss, the stock crashed back down to earth.