Alibaba’s AI and Cloud Gains Fuel Stock Jump, Lifting EM Index

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Alibaba’s largest Hong Kong rally in three years lifted EM stocks as AI revenue soared and cloud sales jumped, fueling investor optimism!

Emerging-market equities staged their strongest session in a week on Monday, fueled by a dramatic rebound in AI-linked stocks across Hong Kong and China. At the center of the surge was Alibaba Group Holding Ltd., whose shares leapt 19% in Hong Kong—the company’s biggest one-day gain in three years—after reporting explosive growth from its artificial intelligence offerings.

Alibaba’s AI Bet Pays Off

Alibaba revealed that revenue from its AI-related products had surged by triple-digit percentages, underlining the Chinese giant’s aggressive push into generative AI and cloud-based services.

The company’s cloud division also impressed, with sales climbing 26% and topping analyst forecasts. Investors, long worried about Alibaba’s growth prospects amid regulatory crackdowns and global competition, seized on the news as a signal of a turnaround story.

The surge lifted broader benchmarks. The MSCI Emerging Markets Index rose 0.7%, buoyed by Alibaba’s performance. The rally came during thin trading volumes, as U.S. markets were closed for the Labor Day holiday, reducing global liquidity.

The gains marked a sharp contrast to last week’s broader Asian market slump, which was triggered by a technology selloff on Wall Street. With sentiment battered by U.S. tech volatility, Alibaba’s rebound injected fresh optimism into emerging markets, particularly in Asia.

Currency Moves Across Asia

While equities surged, the MSCI EM currency gauge remained largely flat, reflecting muted activity in holiday-thinned markets. The standout performer was the Indonesian rupiah, which climbed the most against the U.S. dollar in Asia. The move followed Bank Indonesia’s intervention to stabilize the currency amid political unrest at home. Still, Indonesian equities struggled, sliding as protests weighed on investor confidence.

Elsewhere, investors kept a close eye on Thailand, where the Constitutional Court’s ruling to end Paetongtarn Shinawatra’s premiership raised fresh political questions.

Europe’s emerging markets also added intrigue. Poland posted second-quarter GDP growth driven by rising domestic demand, sending the zloty higher against both the euro and the dollar.

Meanwhile, global investors monitored the fallout from a U.S. federal appeals court ruling that declared most of former President Donald Trump’s tariffs illegal. The decision has yet to alter the levies in practice, but injected fresh uncertainty into global trade discussions.

The Next Step?

With the U.S. holiday behind them, traders are shifting focus to key American economic indicators due this week. This could provide fresh clues on the Federal Reserve’s interest rate trajectory. For now, though, Alibaba’s AI-powered rebound has reminded investors just how central China’s tech giants remain to emerging-market sentiment.