Wednesday’s surge follows a massive sell-off in the region this week.
(Photo: Bloomberg)
Beijing Chinese tech stocks have recovered after the past few days’ sell-off. Hong Kong’s Hang Seng Tech Index rose more than 15 percent at times 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 winners in Hong Kong included games group Netease, e-commerce group Alibaba, travel platform Trip.com, search engine giant Baidu and electric car newcomer Xpeng. However, the companies were also among the biggest losers in the days before.
Wednesday’s surge follows a massive sell-off in the region 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.
Apparently, investors took advantage of the high price losses to get started. However, according to experts, the risks outweigh the short-term risks. JP Morgan Chase & Co. described a number of Chinese Internet companies as “uninvestable” in the short term in a study earlier this week.
Top jobs of the day
Find the best jobs now and
be notified by email.
“It looks more like a rebound than a bottom as we don’t see any big inflows,” Steven Leung, executive director at major brokerage UOB Kay Hian Hong Kong, told Bloomberg.
>> Read also: Three Reasons China Stocks Plunge in Hong Kong and US
In addition, the reasons for the sell-off in the past few days remain – above all the concern that Chinese companies in the USA will be forced to be delisted. The growing tensions between the USA and China due to the opposing positions in the Ukraine war continue to unsettle the markets.
China is suffering from the largest Covid outbreak since 2020
To make matters worse, China 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