Chinese technology shares advanced on Monday as the sector’s outlook improved further following regulator comments that a years-long crackdown is ending.
Alibaba Group jumped as much as 6% to lead gains on the Hang Seng Tech Index, which rose more than 2% early on Monday. The broader market also gained, with the Hang Sang China Enterprises Index rising as much as 1.7%.
China’s equities have had a strong start to the year, buoyed by bets that pro-growth policies and a peak in Covid infections will fuel an economic recovery. Comments by Guo Shuqing, party secretary of the People’s Bank of China, that a clampdown on the tech sector is coming to an end likely gave traders further conviction.
Investor mood has turned more favourable towards Alibaba as founder Jack Ma is ceding controlling rights of Ant Group, whose listing was abruptly scuttled in 2020. While a change in corporate control will delay an eventual listing of Ant, it’s in line with authorities’ intention to enhance corporate governance as part of a regulatory overhaul.
“Investors could view this as a major step forward in removing the regulatory overhang since Ant’s IPO failure,” said Willer Chen, senior analyst at Forsyth Barr Asia. “It’s a positive for Alibaba’s shares and investor sentiment.”
Strategists at Goldman Sachs Group and Morgan Stanley have upgraded their views on a slew of big tech names, citing a faster-than-expected reopening and a normalising regulatory environment. Having borne the brunt of selling over the past two years, the Hang Seng Tech gauge has rallied about 60% since an October low. — Jeanny Yu, with Charlotte Yang, (c) 2023 Bloomberg LP