Shares of Chinese tech companies rallied this week on hopes that Beijing is close to ending a year-long regulatory crackdown on the sector.
Alibaba rose 1.9% on Tuesday (7), after a 5% gain on Monday. JD.com advanced 3%, after rising 4.7% the day before.
Other technology stocks have also risen sharply since Monday. TikTok rival Kuaishou grew 1.2% on Tuesday, adding to a 5.1% increase in the previous session. And Meituan food delivery service was up 0.5% on Tuesday and up 10% so far this week.
The gains followed a strong session for Chinese stocks on Wall Street on Monday, as the Nasdaq Golden Dragon China index rose 5.4%.
Didi company was the biggest gainer in New York, jumping up to 67% after the Wall Street Journal reported that Beijing’s cybersecurity review of the transit giant was about to end. The move would allow Didi to return to app stores in mainland China, potentially as early as this week.
“The headline sparked speculation that Beijing was ending its crackdown on the platform economy to support growth, given the increasing downward pressure on China’s growth,” said Ken Cheung, chief Asian foreign exchange strategist at Mizuho Bank. However, it would take time to restore business confidence, he added.
China’s economic outlook has deteriorated rapidly in recent months amid widespread lockdowns related to Covid-zero policy. Consumer spending and factory output shrank sharply in April, while unemployment rose to the highest level since the initial coronavirus outbreak in early 2020.
Worried about the worsening outlook, Beijing has signaled it will ease its year-long crackdown on the technology sector – a key engine of the country’s growth and the main source of jobs.
In recent weeks, senior government officials have tried to cheer up the internet industry and pledged to support tech companies looking to list in foreign markets.
Officials also unveiled a new package of 33 stimulus measures to support post-Covid growth, including tens of billions of dollars in additional tax cuts and infrastructure spending.
Major cities like Beijing and Shanghai have gradually reopened and lifted Covid restrictions, with everyday life starting to return to normal.
Chinese stocks are pricing in “the worst is over” as China reopens its economy, said Jeffrey Halley, senior market analyst at Oanda.
The Shanghai Composite index rose 0.2% on Tuesday, ready for a third straight day of gains. It rose 1.3% on Monday. The large cap CSI 300 rose 0.4% after a 1.9% advance on Monday.
Hong Kong’s Hang Seng index, meanwhile, retreated slightly after rising 2.7% the day before.
Source: CNN Brasil

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