By Reshma Kapadia

Chinese leader Xi Jinping's comments on Monday at a symposium with top business executives, including Alibaba Group Holding co-founder Jack Ma, offered the latest signal that Beijing is committed to reviving private sector confidence after years of harsh crackdowns, especially in technology.

The symposium also offered a glimpse of the companies critical to Beijing's future -- those that could do well if China's recent market run continues, analysts said. Andy Rothman, head of China-focused Sinology, and others have stressed that what Xi does on the domestic front to revive business and consumer confidence likely has a bigger impact on the market than geopolitical an d tariff headlines for now.

The iShares MSCI China exchange-traded fund was up 0.71% at $53.84 on Monday morning and Alibaba shares were up 2.5% to $127.92. In China, shares of electric vehicle maker BYD closed up 2% at 356.22 yuan.

In a note to clients on Monday, Rothman said Xi's speech seemed to acknowledge that recent regulatory changes were key obstacles and described them as "temporary rather than long-term, and can be overcome rather than unsolvable." Rothman saw the remarks as a possible attempt to counter the notion that regulatory crackdowns in the last couple of years were ideologically driven, a view that saps the "animal spirits" necessary for entrepreneurial confidence.

Other analysts also saw the remarks and symposium as the latest signal Beijing is trying to course-correct to revive its economy and repair business confidence, which has been depressed after Xi's crackdown on the technology sector upended the business models of for-profit online education companies and shaved billions off the market value of internet giants like Tencent Holdings and Alibaba -- and made executives like Alibaba's Ma persona non grata.

The symposium offered a glimpse of the types of companies Beijing wants to prioritize, with the heads of BYD and battery maker CATL, Unitree Robotics, known for its humanoids, and Xiaomi and Huawei Technologies, two companies the U.S. tried to hamstring with export restrictions and sanctions in attendance. Also there: Ma, a notable appearance for a once ubiquitous executive who has stayed out of the limelight over the past couple of years.

TS Lombard Head of Research Rory Green described the meetings, including Ma's inclusion, as "very significant," that add to a series of policy reversals since last fall that boosts his view China will try to hit its 5% GDP growth target. Whether the symposium can sustainably lift private sector confidence will depend on whether the words are followed with action -- namely fiscal stimulus from the coming National People's Congress.

The event adds to the improving sentiment toward Chinese stocks but analysts said talk isn't going to be enough. In a note to clients, Goldman Sachs analysts said implementation of policies -- including stimulus to spur consumer demand and more market-friendly policy reforms -- are critical to rebuild confidence.

"A basket of firms that met Xi weighted by the proximity of CEO/founder to the president would probably do quite well," Green says. "The main beneficiaries in the group are companies that have clear upside from pending regulatory approvals. The most prominent is Alibaba which would get a huge boost from approval for Ant's IPO."

Green also expects the recent tech rally to widen to advanced infrastructure and consumer stocks, especially if Beijing delivers on its vows to continue to stabilize the economy with fiscal measures. "While consensus views have caught up on the size of the stimulus, markets are still underestimating the efficacy of fiscal easing," he adds.

But some investors are cautious given the run-up in technology stocks on the back of excitement around DeepSeek. The rally has been fueled largely by sentiment rather than fundamentals, says Joanna Yang, portfolio co-manager for the All China Equity and China A Shares Strategy at Ninety One via email. While she is optimistic about the long-term potential for some of these stocks, the sharp gains so far narrow the valuation discount and require fundamentals to improve for the rally to keep going, she says.

Indeed, the past year has shown that sentiment-powered run-ups in Chinese stocks have fallen apart when Beijing hasn't delivered. On that front, if Beijing puts action to its words, it could nudge some investors to add back at least a little bit of exposure to Chinese stocks tactically, offering the market another boost.

Write to Reshma Kapadia at reshma.kapadia@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 18, 2025 12:50 ET (17:50 GMT)

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