• Alibaba stock climbed nearly 6% in Thursday's premarket.
  • The Chinese government announced cuts to several important interest rates.
  • Most Chinese stocks are set to rally on Thursday.

Alibaba (BABA) shares have risen 5.9% in Thursday's premarket to $131.50 after the Chinese government decided to cut interest rates for the second time in a month in order to spur on the nation's slowing economy.

Alibaba Stock News: interest rates buoy Chinese equities

On Thursday Hong Kong's Hang Seng Index surged 3.4% on the news that China's central bank would cut the one-year prime loan rate by 10 basis points to 3.7%. The one-year rate was already cut by 5 basis points in late December. At the same time, the five-year rate was cut by 5 basis points to 4.6%.

In addition to the interest rate cuts, China made committments to ramp up infrastructure spending, especially as it concerns high-speed rail. Construction companies and homebuilders rallied on the news as a respite from the recent credit crunch facing their industry in the aftermath of the Evergrande Group debt debacle.

A Reuters report earlier in the week shed light on a US government probe of Alibaba's cloud business. Though it only does about $50 million in annual sales in the US, the government is concerned about the ecommerce giant's secure storage of US individuals' identity data and whether it poses a national security threat.

BABA key statistics

Market Cap $360 billion
Price/Earnings 18
Price/Sales 3
Price/Book 2
Enterprise Value $289 billion
Operating Margin 13%
Profit Margin


52-week high $274.29
52-week low $108.70
Short Interest 2%
Average Wall Street Rating and Price Target Buy, $207.42

Alibaba Stock Forecast: BABA in mode to attack range high above $138

FXStreet exclaimed earlier in the week that BABA shares must hold $123 in order to keep from entering a downtrend. This they have done. The 9-day crossover of the 21-day moving average is still intact from January 10. 

Wednesday's session allowed BABA stock to push up against the 9-day moving average, but it faced resistance there. Today's expected surge should see BABA price easily cross above the 9-day moving average and close solidly in the low $130s. If this takes place according to plan, then BABA may make a run at the range high of $138.63 from January 12 before the week is over.

The Moving Average Convergence Divergence (MACD) has been in a bullish updraft since December 14. If BABA breaks below $123, then support exists at $118 and around $110.

BABA 1-day chart

The author owns shares in Alibaba.

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