Chinese Tech Stocks Advance as Signs of Official Support Grow

Charlotte Yang, Bloomberg News

A public screen displaying stock figures in Pudong's Lujiazui Financial District n Shanghai, China, on Wednesday, June 21, 2023. China's yuan weakened past the closely watched 7.2-per-dollar level as investor sentiment soured on a lack of aggressive stimulus and Beijing signaled a level of comfort about the declines. Photographer: Raul Ariano/Bloomberg , Bloomberg

(Bloomberg) -- China’s tech stocks gained for a fourth day in Hong Kong as growing signs that the government’s long crackdown on the sector is finally over bolstered investor confidence.

The latest leg of the rally came after Chinese Premier Li Qiang met with senior executives from country’s leading tech firms Wednesday and urged local governments to provide more support to the enterprises. He asked the companies to support the real economy through innovation and pledged that officials will create a fair environment and reduce compliance costs.

The Hang Seng Tech Index jumped 3.8%, extending this week’s gains to more than 8%. Among the best performers, Bilibili Inc. and Kuaishou Technology climbed at least 7.5%. The gains tracked the 3.4% rally in the Nasdaq Golden Dragon China Index.

The comments from Li “signify that the Chinese authorities are turning to mega-cap internet companies as an instrument to pursue industrial policies, create employment, and attempt to tackle choke points in critical technology,” said Redmond Wong, strategist at Saxo Capital Markets HK Ltd.

Chinese regulators last week imposed more than $1 billion of fines on Ant Group Co. and Tencent Holdings Ltd., a move widely interpreted as closure to the regulatory assault that had wiped out billions in market value from the sector in recent years.

Read more: China Ends Tech Crackdown With Fines on Tencent, Ant Group

Representatives from food delivery platform Meituan and Xiaohongshu Technology Co., a popular Chinese Instagram-like social media platform, also spoke at Wednesday’s meeting with Premier Li, while JD.com Inc. and budget shopping platform PDD Holdings Inc. submitted written speeches, state broadcaster CCTV reported.

Broader Gains

The Hang Seng China Enterprises Index, a broader gauge of major mainland companies listed in Hong Kong, climbed 2.6%. Market sentiment has improved this week after Chinese authorities extended some loan relief measures for property developers and state-run newspapers flagged the likelihood of further supportive measures to boost business confidence.

Many investors had grown tired of waiting for the government’s crackdown on the private sector to end, even as the economy struggled to gain momentum. Overseas funds cut holdings of Chinese and Hong Kong equities in June, while mainland investors sold a net HK$5.8 billion ($741 million) of Hong Kong shares in June, the first month of net outflows since November, according to exchange data.

The Chinese government is sending a “friendly gesture” to technology companies, said Willer Chen, senior analyst at Forsyth Barr Asia Ltd. in Hong Kong. “Key signal sending from the government is still hoping that platform companies will create more jobs, maintaining international competitiveness and helping real economy.”

--With assistance from Zhu Lin and April Ma.