Chinese tech stocks rally after days of punishing losses


Chinese tech stocks won a reprieve on Wednesday with markets across Asia-Pacific rallying higher after punishing losses, as traders digested new lockdowns in the mainland to combat a coronavirus outbreak and braced for the US Federal Reserve to raise rates.

Hong Kong’s Hang Seng Tech index gained as much as 11.6 per cent in the morning after hitting a six-year low on Tuesday. Shares in Tencent and ecommerce group JD.com added 16.8 per cent and 15.6 per cent, respectively. The stocks had suffered heavy losses over a three-session sell-off that saw the Hang Seng Tech index decline 21.7 per cent.

The gains were not enough to reverse the falls. Hong Kong’s Hang Seng benchmark index gained 6.3 per cent after losing nearly 12 per cent of its value in the three previous sessions.

China’s CSI 300 rose 1.8 per cent after losing 4.6 per cent the day before. Elsewhere in Asia, Australia’s S&P / ASX 200 gained 1.2 per cent in morning trading, while Japan’s Topix and South Korea’s Kospi rose as much as 1.6 per cent and 1.1 per cent, respectively.

European futures pointed higher with contracts for the FTSE 100 up 0.5 per cent and for the Euro Stoxx 50 up 0.6 per cent.

The moves come ahead of a Federal Open Market Committee meeting that is expected to raise US rates for the first time since 2018, even as the war in Ukraine threatens to exacerbate inflation running at its highest annual rate in 40 years.

The prospect of new coronavirus restrictions across China, where cases have hit their highest levels since 2020, as well as global inflationary pressures and the war in Ukraine, had roiled markets, said Jessica Tea, Greater China and Asia Pacific investment specialist at BNP Paribas Asset Management.

Chinese tech stocks, she added, had been effected by regulatory scrutiny in both the US and China. Last week, the US Securities and Exchange Commission announced that five New York-listed Chinese companies faced delisting in early 2024 if they failed to hand over audit documents backing their financial statements.

“That said, there are still some investors who believe that after this big regulatory pressure and US announcement [Chinese tech stocks] will probably reach the bottom, ”she said, explaining that some investors were focusing on the“ long term story. ”

China’s state council on Wednesday pledged to step up support for financial markets and the ailing real estate industry. The government also said it would speed up the process of regulating big tech platforms.

Chinese stocks have also been weighed down by concerns that the country would suffer from western sanctions after reports that Beijing had signaled willingness to offer military assistance to Russia.

Oil prices rose above $ 100 a barrel on Wednesday morning, with international benchmark Brent crude gaining 1.2 per cent to hit $ 101.01 per barrel. It fell to its lowest close in almost three weeks on Tuesday in response to the threat of further lockdowns in China dampening demand. West Texas Intermediate, the US marker, rose 0.7 per cent to $ 97.10.

Additional reporting by Ryan McMorrow in Beijing

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