(Bloomberg) -- Chinese stocks trading in Hong Kong rallied to reach a key milestone as sentiment improved following upbeat economic data and corporate developments.

The Hang Seng China Enterprises Index gained 2.1% on Wednesday, taking its advance from a Jan. 22 low to more than 20%. The gauge has entered a so-called technical bull market for the first time since China scrapped Covid controls in late 2022. 

Tech stocks led Wednesday’s advance, buoyed by a jump in electric vehicle sales, buybacks in the sector and China’s latest batch of online game approval. The Hang Seng gauge became the latest addition to a cohort of other Chinese gauges that have reached such a milestone in recent weeks, as foreign funds return amid Beijing’s resolve to stabilize markets. 

“Today’s move is being led by Tencent Holdings Ltd. and Alibaba Group Holding Ltd., which have been supported by share buybacks as well as more positive news on China’s gaming industry,” says Marvin Chen, an analyst with Bloomberg Intelligence. 

Chinese stocks have been recovering from a rout after Beijing took a series of steps including purchases by state funds and a clampdown on quantitative funds, along with fresh moves to ease the nation’s housing crisis. Some global investors are starting to buy into the narrative that Beijing’s policy support will be enough to revive growth, with a popular equities strategy to “buy India, sell China” likely having reached an inflection point.  

Read more: China Home Sales Drought Persists With Little Recovery Sign

Investors have turned more optimistic about the world’s No. 2 economy after a spate of positive economic data. Chinese tourists spent 13% more during the Qingming holidays than in the pre-pandemic period of 2019, adding to recent economic green shoot including a gauge of manufacturing activity that registered its highest reading in a year. 

Some heavyweights have surprised to the upside on earnings, with PetroChina Co.’s annual profits rising to a record. Flows from Chinese onshore funds have also been helping the rally. Mainland Chinese traders bought Hong Kong shares on a net basis for the ninth straight month in March. 

“The optimistic sentiment toward upcoming first quarter results, especially on Chinese tech names” helped boost stocks, said Sonija Li, an analyst at MIB Securities Hong Kong Ltd. 

Stocks on the mainland slipped, however, on likely profit taking after a recent rally. The CSI 300 Index closed down 0.8%. Fitch Ratings revised China’s outlook to negative from stable on Wednesday, underscoring lingering concerns over the government’s debt load as it seeks to revive the economy. 

Even with the latest advance, the HSCEI is still down more than 22% from a peak recorded during the reopening rally last year. A more sustainable rebound would hinge on a confluence of factors, ranging from Beijing’s success in tackling its property woes to the magnitude of further fiscal or monetary easing and reduced tensions with the US. 

--With assistance from Sangmi Cha.

(Updates with CSI 300 Index moves.)

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