JPMorgan Downgrades Alibaba and Other China Tech Stocks Following Selloff; Calls It "Uninvestable" For Next 6-12 Months

JPMorgan analyst Alex Yao double downgraded Alibaba Group Holding LtdBABA to Underweight from Overweight with a price target of $65, down from $180 (21% downside). 

Due to rising geopolitical and macro risks, many global investors fled the China internet sector, leading to significant fund outflows. The trend was likely to continue it being the most owned stock. The pressurized core business also jeopardized its near to mid-term business outlook, with rising inflation and "weakening consumption confidence thanks to China's COVID resurgence. 

JPMorgan believed China's sector-wide selloff might continue without valuation support in the near term as risk management becomes the most crucial consideration among global investors about their China investment strategy. 

"Alibaba is not only the sentiment barometer of China Internet but also a proxy to China online consumption." Analysts see the China Internet names as "uninvestable" on a six-to-12-month view with a binary share price outlook. 

Other stocks downgraded included JD.com Inc JD, Baozun Inc BZUN, Dada Nexus Ltd DADA, Baidu Inc BIDU, Bilibili Inc BILI, Kingsoft Cloud Holdings Ltd KC, Tencent Music Enter Group TME, NetEase Inc NTES, HUYA Inc HUYA, DouYu International Holdings Ltd DOYU, Zhihu Inc ZH, JOYY Inc YY, Trip.com Group Ltd TCOM, OneConnect Financial Technology Co Ltd OCFT, Hello Group Inc MOMO, iQIYI Inc IQ, Kimball Electronics Inc KE, Pinduoduo Inc PDD.

Price Action: BABA shares traded lower by 10.20% at $77.84 on the last check Monday.