Why NetEase (NTES) Shares Are Trading Higher

NetEase Inc NTES shares are trading higher by 7.22% to $86.30 Tuesday afternoon, driven by a broader rally in Chinese equities after the People's Bank of China (PBoC) announced a monetary stimulus package aimed at bolstering the country's flagging economy.

What Happened: NetEase, a leading Chinese technology and gaming company, surged amid significant cut in the reserve requirement ratio (RRR) and key policy rates by the central bank. These actions are expected to inject liquidity into the financial system, creating favorable conditions for growth in sectors like online gaming and e-commerce, where NetEase is a dominant player.

The PBoC's decision to reduce the RRR by 50 basis points, from 10.0% to 9.5%, will release approximately 1 trillion yuan ($140 billion) into the banking system. This move is expected to lower borrowing costs and increase lending, particularly to technology companies that require capital for expansion and development.

Read Also: Consumer Confidence Tumbles As Concerns Over Labor Market Grow, Odds Rise For 50-Basis-Point Interest Rate Cut In November

The gaming industry, in which NetEase holds a significant market share with blockbuster titles like Fantasy Westward Journey and Justice Online, stands to benefit from the increased liquidity and lower financing costs. As consumer spending potentially rises due to the loosening of monetary conditions, NetEase is positioned to capture a larger share of the market.

What Else: The reduction in mortgage rates by 0.5 percentage points is also seen as a positive for the overall economic environment, likely boosting disposable income for Chinese consumers. A healthier consumer market typically translates to greater discretionary spending on entertainment and online services, areas where NetEase excels.

As one of China’s largest internet and online gaming companies, NetEase has diversified into areas such as e-commerce, music streaming, and education, all of which could see growth amid a more supportive economic backdrop.

NetEase has been expanding aggressively in overseas markets as well, particularly in North America and Japan, leveraging its strong gaming portfolio to reduce reliance on China's domestic economy. This global push, combined with the stimulus measures designed to revive domestic growth, positions NetEase well for both short-term gains and long-term resilience.

Read Also: Nvidia Stock Is Ripping Higher Tuesday: What’s Going On?

How To Buy NTES Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in NetEase’s case, it is in the Communication Services sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

According to data from Benzinga Pro, NTES has a 52-week high of $118.89 and a 52-week low of $75.85.