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(Bloomberg) -- The droves of Americans turning to Chinese-made social apps as an alternative to TikTok represent a potentially new customer base for some mainland consumer companies, helping boost their stocks.
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More than 2 million users flooded to Xiaohongshu — now known in the US as RedNote — in just two days after the US Supreme Court signaled it was likely to uphold a law banning the popular TikTok app. Stocks such as Hangzhou Onechance Tech Corp. and Yantai China Pet Foods Co. have surged since then on optimism they will benefit as the new users search out Chinese-made goods. Their shares were mostly mixed on Tuesday after Trump ordered the Attorney General not to take any action on TikTok for 75 days.
“This phenomenon certainly has lifted sentiment for many investors,” said Chen Shi, a fund manager at Shanghai Jade Stone Investment Management Co. “The cross-border discussions show that Chinese goods do have appeal and are competitive in the eyes of the US consumer.”
Xiaohongshu, described as a Chinese version of Instagram, became the most-downloaded free app on Apple Inc.’s iPhone download charts and climbed into the top 10 on Alphabet Inc.’s Google Play store. TikTok restored service in the US on Sunday following a brief shutdown after Trump delayed the enforcement of a national-security law and said he would give its owners more time to find a buyer.
Digital-marketing firm Hangzhou Onechance Tech jumped more than 70% from its close on Jan. 13 to its high three days later on speculation Chinese companies would step up their social-media exposure on Xiaohongshu or increase content for English-speaking users.
Yantai China Pet Foods spiked as much as 25% over three days from Jan. 14 as new US users to Xiaohongshu were asked by Chinese ones to share a photo of their pet as a so-called “cat tax.” Manufacturers of home appliances, apparel and snacks that have a high presence on the app may also be possible beneficiaries, analysts said.
‘Great’ Potential
“American users have great consumption potential, and if they stay on the platform, will boost Xiaohongshu’s ecosystem and benefit the multi-channel-network, cross border e-commerce, marketing companies and brands with overseas business,” Zhao Zhongping, an analyst at Sinolink Securities, wrote in a research note Sunday.