Wednesday’s surge follows a massive sell-off in the region this week.
(Photo: Bloomberg)
Beijing Chinese tech stocks in Hong Kong and the US have rebounded strongly after the past few days’ sell-off. Hong Kong’s Hang Seng Tech Index rose more than 22 percent on Wednesday. The day before, China stocks listed in the US had risen again for the first time since Thursday last week. The Nasdaq Golden Dragon Index, which includes 30 US-listed China stocks, rose almost five percent.
The biggest gainers in Hong Kong included data center operator GDS (up 48.3 percent) and video platform Bilibili (up 40.8 percent). The shares of the e-commerce group JD.com, the travel agent Trip.com, the streaming provider Kuaishuo, the electric car newcomers Li Auto and Xpeng, the health platform JD Health and the food delivery service Meituan also rose by more than 30 percent. However, the companies were also among the biggest losers in the days before.
Wednesday’s jump follows a massive sell-off at these levels this week. The Hang Seng China Enterprises Index, an indicator of Hong Kong-listed Chinese companies, fell on Monday, the sharpest since the global financial crisis. The Nasdaq Golden Dragon Index had previously lost nearly 30 percent, losing $207 billion in market value.
Market observers justified the rally with a report by the state news agency Xinhua. Accordingly, the Chinese government wants to keep the stock market stable, prevent companies in the mortgage sector from going bankrupt and help domestic technology companies with an overseas listing.
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In particular, concerns about a forced delisting of Chinese tech companies in the USA had previously caused high selling pressure. China stocks listed in the US and companies with double listings in New York and Hong Kong were affected.
>> Read also: Three Reasons China Stocks Plunge in Hong Kong and US
Earlier this week, analysts from JP Morgan described a number of Chinese internet companies as “not investable” in the short term in a study. After the positive signal from Beijing, investors apparently used the high price losses of the past few days to get started.
China is suffering from the largest Covid outbreak since 2020
However, concerns about China’s economic woes remain. Premier Li Keqiang warned on Friday of “downside risks”, “complications” and “uncertainties” for the Chinese economy.
In addition, the People’s Republic is currently suffering from the largest Covid wave since the pandemic first broke out in Wuhan two years ago. Several cities with over a million inhabitants are in lockdown, including the industrial location of Changchun in northern China and the tech metropolis of Shenzhen in the south. The number of new infections reported was more than 3000 on Wednesday, a slight decrease compared to the previous day (5000).
The pandemic situation in China has “deteriorated at an alarming rate” in the past week, wrote Lu Ting, chief China economist at Japanese investment bank Nomura, in an analysis. “China’s economy could be hit hard again,” he warned. The problems in China’s important real estate sector, which continue to smolder despite government support measures, are also unresolved.
In the case of tech stocks, there are also concerns about further regulatory measures by Chinese supervisors. Recently, media reports about an impending record fine against Tencent and an official veto on the planned Hong Kong IPO of the Chinese taxi service provider Didi had caused additional selling pressure.
The price slide of the past few days has also cost China’s billionaires dearly. According to the Bloomberg Billionaires Index, Zhong Shanshan, known as China’s mineral water king, lost more than $5 billion. Tencent founder Pony Ma’s fortune fell by $3.3 billion.
With agency material.
More: Sell-off in China’s tech stocks: SEC review raises fears of forced delisting