Alibaba Regulatory Woes A 'Nirvana Set Up' For FAANG Stocks, Says Analyst

The regulatory crackdown on Chinese “tech stalwarts” such as Alibaba Group Holding Ltd BABA is favorable for the so-called FAANG stocks, according to Wedbush analyst Daniel Ives.

What Happened: Ives theorized in a note Monday that the decoupling between the United States and China would have led to Chinese companies such as Alibaba, JD.com, Inc JD, Baidu, Inc BIDU, Tencent Holdings Limited TCEHY, and others gaining more “investor mindshare” due to a complex global backdrop.

However, the delayed Ant IPO and the “regulatory crackdown” on the Chinese tech sector have delivered a major “black eye,” as per the analyst — casting a “shadow over the space with Alibaba front and center.”

“We believe these dynamics will yet again bode well for US tech stocks as the favorable backdrop creates a ‘nirvana set up’ for FAANG names and the overall US tech sector into 2021,” wrote Ives.

FAANG stocks comprise Facebook Inc FB, Apple Inc AAPL, Amazon.com, Inc AMZN,  Netflix Inc NFLX, and Google-parent Alphabet Inc GOOGL GOOG.

Why It Matters: The analyst said that the US-China decoupling could take an altered path under Joe Biden in the White House, whose administration is likely to take a “much softer tone” in the eyes of the Street.

See Also: US Senate Passes New Regulations For Chinese Companies; Alibaba, Others Trade Down

KeyBanc Capital Markets analyst Hans Chung said recently that Pinduoduo Inc PDD and JD.com are likely to be the primary and secondary beneficiaries of the Chinese regulatory investigation into Jack Ma-founded Alibaba.

Price Action: On Monday, Facebook and Apple shares closed nearly 3.6% higher at $277 and $136.69 respectively. The same day, Amazon shares ended the regular session almost 3.5% higher at $3,283.96, while Netflix shares closed 1% higher at $519.12.

Alphabet Class A shares closed 2.3% higher at $1,773.96 and the company’s Class C shares closed 2.14% higher at $1,776.09.