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China's Crackdown on Alibaba Great for U.S. FAANG Stocks: Wedbush

'Dynamics will yet again bode well for U.S. tech stocks as the favorable backdrop creates a nirvana set-up for FAANG,' Wedbush says.
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China’s regulatory crackdown on internet titan Alibaba  (BABA) - Get Alibaba Group Holding Ltd. Report and its affiliate Ant Financial Group should help the U.S. technology sector, says analyst Daniel Ives of Wedbush.

“It was viewed by investors pre-Elections in early November that Chinese tech stalwarts such as Baidu  (BIDU) - Get Baidu Inc. Report, Tencent  (TCEHY) , Alibaba,  (JD) - Get Inc. Report and others were positioned well to gain more investor mind-share, given the complex global backdrop,” Ives wrote in a commentary Monday. “Fast forward to today and the Ant Financial IPO delay and further regulatory crackdown is a major black eye for the Chinese tech sector and thus cast a shadow over the space, with Alibaba front and center.”

Chinese regulators are investigating Alibaba on antitrust grounds and told Ant to narrow its focus to payments. Alibaba owns 33% of Ant, the world’s largest financial technology company.

That means “dynamics will yet again bode well for U.S. tech stocks as the favorable backdrop creates a nirvana set-up for FAANG [Facebook  (FB) - Get Meta Platforms Inc. Class A Report, Amazon  (AMZN) - Get, Inc. Report, Apple  (AAPL) - Get Apple Inc. Report, Netflix  (NFLX) - Get Netflix, Inc. Report and Google (Alphabet)  (GOOGL) - Get Alphabet Inc. Class A Report] names and the overall U.S. tech sector into 2021,” Ives said.

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With Joe Biden as president and a likely Republican-controlled Senate, Ives also noted that “the gridlock situation is bullish for the tech sector, as now it appears any potential antitrust legislative changes/fixes against Big Tech have essentially hit a brick wall."

And on the China front, “the U.S./China decoupling path could be altered with Biden in the White House,” he said. “The U.S./China Cold Tech war under a Biden White House likely takes a much softer tone going forward.” That would particularly help Apple, Cisco  (CSCO) - Get Cisco Systems, Inc. Report, and semiconductor companies, Ives said.

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