The shares of a group of companies associated with Xiaohongshu continued their upward momentum on Wednesday, buoyed by the Instagram-style Chinese app's ascent to the top of the download charts in the United States.
While the rally underscored investors' growing confidence in Xiaohongshu and companies linked to it, industry experts said it is more important for Chinese enterprises to seize this momentum to cement their foothold in the international market, particularly amid intensifying geopolitical uncertainties.
READ MORE: 'TikTok refugees' migrate to Xiaohongshu amid ban fears
On Wednesday, more than 10 companies that do business directly or indirectly with Xiaohongshu hit their daily limits on multiple stock markets. The standouts included Hangzhou Onechance Tech Corp, an e-commerce service provider in the A-share market, and Sunwave Communications, a wireless communication technology provider.
Inmyshow Digital Technology (Group), a provider of data-driven marketing solutions for brands on the platform, hit a daily limit by soaring 9.92 percent on the Shanghai Stock Exchange.
In response to the rally, Inmyshow noted that with a strong foothold in the advertising and marketing industry, it maintained deep partnerships with major platforms such as Xiaohongshu.
Wang Peng, a researcher at the Beijing Academy of Social Sciences, said, "The rally reflects investors' optimism about Xiaohongshu's potential to penetrate the global market and elevate its affiliated companies."
What's even more critical is how these companies capitalize on this opportunity to sustain international users over the long term and reshape the global social media landscape, Wang said.
In recent weeks, Xiaohongshu has seen a massive influx of users from TikTok amid fears of the app being banned in the US if the Supreme Court upholds the ban.
Data research firm Sensor Tower showed that Xiaohongshu's US downloads surged more than 200 percent year-on-year this week and 194 percent last week.
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Xiaohongshu, also known as RedNote, was launched in 2013 and has grown into one of China's most popular social media and e-commerce platforms.
As consumers can also buy lifestyle items on Xiaohongshu, a group of consumption-related stocks also surged. Snack chain Lyfen, for example, achieved a five-day streak on Wednesday of hitting the daily limit.
Pan Helin, a member of the Ministry of Industry and Information Technology's Expert Committee for Information and Communication Economy, said this trend of TikTok users seeking refuge in Xiaohongshu reflected the dissatisfaction of netizens, who often choose digital tools to amplify their voices.
"The platform will face several key challenges in the future including monetization. How it can harmonize domestic and international user experiences without running into a wall of cultural differences also remains to be seen," Pan added.
