HONG KONG (BLOOMBERG) – Chinese technology stocks continued their rebound on Monday after Beijing slapped a smaller-than-expected fine on food delivery giant Meituan.
Hong Kong’s Hang Seng Tech Index jumped as much as 3 per cent in a third day of gains after closing at a record low last Wednesday. Meituan rose as much as 8.7 per cent, making it the top performer on the gauge. The stock also boosted the broader Hang Seng Index, which gained as much as 2.2 per cent.
“Meituan’s better-than-feared antitrust penalty may be leading investors to rethink the severity of punishments that may follow from China’s tech crackdown,” said Bloomberg Intelligence analyst Matthew Kanterman. “However, uncertainty remains and may continue to keep sector valuations depressed for several more months until there’s greater clarity on the situation.”
The tech sector has been in Beijing’s crosshairs for almost a year as the government seeks to rein in tech billionaires and bend their business models to fit President Xi Jinping’s “common prosperity” campaign. The rise in global bond yields has added to the woes for tech shares, reviving concerns about their valuations.
The tech rebound gained some support last week with news that that U.S. President Joe Biden was planning to meet with Mr Xi before the end of the year.
Among other tech stocks to advance Monday, JD Health International surged as much 10 per cent, the most since Sept 1, while Alibaba Group Holding climbed as much as 8.4 per cent, the most since Aug 24.
Alibaba got an extra boost last week by a report that Mr Charlie Munger’s Daily Journal had increased its stake by 83 per cent last quarter. “The momentum continues in buying Alibaba after Munger,” said Mr Steven Leung, executive director at UOB Kay Hian in Hong Kong.
While the sentiment on Monday was positive, the tech gauge remains more than 40 per cent below its February peak and the sector’s outlook is still clouded by the government’s crackdown.