HONG KONG (BLOOMBERG) - Technology stocks led a broad rally in Chinese equities on Friday (April 29), with traders citing speculation of a possible easing of the nation’s continued crackdown on Internet firms.
The Hang Seng Tech Index jumped as much as 11 per cent in Hong Kong, the most since March 17, led by names such as Alibaba Group Holding and JD.com. Traders cited rumours including one about an upcoming meeting between tech firms and policymakers about relaxation of the year-long regulatory clampdown.
The Communist Party’s Politburo on Friday vowed to support healthy growth of platform firms, among other things, according to a report by state broadcaster China Central Television. Top leaders also pledged to meet economic targets, a sign that China may step up stimulus to support growth amid the country’s worst Covid-19 outbreak since 2020.
“Stocks are oversold and there is speculation of the potential end to the crackdown on these companies,” said Mr Justin Tang, head of research at United First Partners.
Meanwhile, people familiar with the matter told Bloomberg News that Beijing is discussing with American regulators the logistics of allowing on-site audit inspections of Chinese companies listed in New York - a sign of progress in talks to keep US stock markets open to issuers from Asia’s largest economy.
China appears to be “compromising” with the US regulations on keeping Chinese companies listed overseas, said Mr Tang.
Hong Kong’s benchmark Hang Seng Index climbed as much as 4.4 per cent while the CSI 300 Index of Chinese shares rose more than 2 per cent. A Bloomberg gauge of developers erased earlier losses to rise as much 1.7 per cent, after the authorities said efforts will be made to help the stable and healthy development of the property market.
The offshore renminbi also reversed losses after the Politburo announcements.
Chinese tech stocks rebounded strongly from a historic rout mid-March after a committee led by Vice-Premier Liu He made a sweeping set of policy promises. However, a Covid-19 flare-up and a lack of concrete steps continued to weigh on the broader China stock market.
Officials on Friday reiterated support for China’s dynamic Zero-Covid-19 policy, a key sticking point that traders have remained wary about. The nation’s adherence to this measure has forced lockdowns from Shanghai to Beijing, adding to the concerns for investors already grappling with Federal Reserve rate hikes.
“The gist of the pledges is similar to Liu He’s, but in the past weeks some people thought it was all empty slogans,” said Mr Wu Xianfeng, fund manager at Shenzhen Longteng Asset Management. “We are in the process of witnessing policy implementation now.”