According to a Bloomberg report, China may enact a rescue package worth 2 trillion Chinese yuan — equivalent to upwards of $278 billion — to stabilize markets after massive losses tied to the pandemic. The stimulus plan aims to buoy the struggling Chinese economy and flailing equities markets.

Yahoo Finance's Seana Smith and Brad Smith break down the details.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

BRAD SMITH: Also everyone, we're tracking China this morning internationally. China, reportedly considering a 2 trillion yuan rescue package. That's accordingly-- that's nearly, excuse me, $280 billion US as the country's economy struggles to recover from pandemic losses. This is according to Bloomberg.

Now the package would be used to help stabilize the slumping Chinese equity market by purchasing stocks on the Hong Kong exchange. Now what's interesting about this as well is that you've got some banks and some firms starting to name their top picks within the region, knowing that this inflow of stimulus and capital could lead more to investment opportunities as well.

And if that does indeed play out, Morgan Stanley, JPM, some of their top internet picks in China, could indeed be some of the winners within that alpha-driven investment strategy, continuing to offer good risk reward is what JPMorgan is talking about. And that was most recently in their mid-January note.

SEANA SMITH: Yeah, and this also brings me back to a conversation I had at the end of last year, obviously, before this latest announcement or this latest reporting has taken place, and before the latest data that we got out last week about the fact that the recovery continues to struggle so much. But I was talking with one of the analysts over at Barclays, Jiong Shao, and he was telling me that Alibaba, Pinduoduo-- despite all the troubles that we're seeing over in China, that it is still among his top picks.

And he's making that case, because if we do see any improvement, we're coming off of a very attractive valuations. The fact that some of these companies have struggled now for some time, given the fact that the consumer in the home market has been so weak or a struggle now to really ever return from those prepaid-- from the pandemic lows, is a bullish case for some of these stocks.

And we're seeing that reflected in some of these moves here this morning with Alibaba, which you just had up on the screen. JD.com, Baidu, among the outperformers in today's market. So if we do see any sort of rescue here from Chinese officials, that could bode well.

But remember, though, Brad, what Shehzad Qazi was telling us yesterday, and he was saying that even if we do see any sort of intervention, it's not necessarily going to live up to what investors are hoping to see. It's still going to fall a bit short. And because of that, he's saying we could see or we could be on a road for a little bit more challenging times ahead.

BRAD SMITH: Yeah, another name that had been brought up within some of those picks within China as well, BYD. We've continued to hear that come up in some of the top picks, a company that's really powering forward in more of their production capacity as well as talking about things like AI cars at this point in time, which who knows when we'll see that fully come to a critical mass here.