Chinese technology shares rallied in Hong Kong on Monday as bargain hunters pounced in the wake of the sector’s worst rout in months.
The Hang Seng Tech Index climbed as much as 4.5%, the biggest jump since July, following a near 11% slump last week. The gauge had dropped for five straight weeks in its biggest such losing streak since January 2019. It had closed at its lowest since July 2020 inception on Friday.
JD Health International and Bilibili both gained about 10% each in morning trading. The sector’s bellwether Tencent Holdings — 28.9% held by Naspers spin-off Prosus — rose as much as 4.4%, the most in nearly two weeks.
The index, which tracks the biggest technology stocks in China, has lost more than 40% since a February peak, with its members seeing about US$1.5-trillion of value evaporate. While many investors remain skittish over Beijing’s rapid crackdown on private industry, the recent sell-off has created opportunities for some.
The slump took the tech index into oversold territory last week on relative-strength charts that often trigger bargain hunting. Some are also betting that Beijing’s moves to reduce wealth gap and boost competition will help markets in the long term.
Alibaba Group remains oversold as it dropped to another record low in Hong Kong on Monday before paring some loss. Video streaming giant Kuaishou Technology rose but is still trading in the oversold zone ahead of its earnings report on Wednesday.
“After another week of heavy selling, some rebound can be expected as much of the tech sector is beginning to look like value plays,” said Marvin Chen, an analyst at Bloomberg Intelligence. “Volatility in the sector may ease as markets settle into the new reality of long-term reforms, but there is still quite a lot of uncertainty on the impact to the sector’s growth profile,” he added. — Reported by Abhishek Vishnoi and Olivia Tam, (c) 2021 Bloomberg LP