HONG KONG (BLOOMBERG) - Chinese tech shares jumped on Friday (May 27) after two of the biggest Internet giants reported earnings that topped estimates, easing investor worries about the economic hit from Covid-19 lockdowns.
Hong Kong's Hang Seng Tech Index gained as much as 4.9 per cent, the most in a week. E-commerce leader Alibaba Group Holding and Baidu were among the top gainers, rallying by at least 13 per cent each.
Both Alibaba and Baidu reported sales growth that was higher than expected, suggesting that some of China's largest businesses have found ways to wade through strict Covid-19 restrictions in key cities. The revenue gains offer a rare but encouraging sign in an economy that has come to a standstill due to stringent movement controls.
"We do expect the second quarter to mark the bottom in growth for our companies," Mr Ronald Keung, head of Asia Internet research at Goldman Sachs Group said in a Bloomberg TV interview.
Investors are also hoping that the more than a year-long crackdown on private enterprise is approaching an end. Policymakers have been vowing support for the industry as part of their effort to support a slumping economy.
The Nasdaq Golden Dragon China Index of Chinese firms trading in the United States jumped 7.6 per cent on Thursday. Hong Kong's Hang Seng Index gained as much as 3.3 per cent on Friday, while China's CSI 300 Index climbed as much as 1.5 per cent.
Still, traders remain wary that fresh virus outbreaks and Beijing's adherence to a Covid-19-zero policy may roil further market upside. Any policy support may also be gradual, with Tencent Holdings executives warning last week that it will take time for Beijing to act on promises to support the sector.