Up 12% over the past month, the beaten down Hang Seng Tech Index (HSTECH) appears to be getting a fresh lease of life.
The index is helped by a plethora of positive news such as Alibaba and JD.com posting record sales on the recent Singles’ Day on 11 November, as well as comments last month by China’s top financial regulator that significant progress in the ongoing crackdown on fintech firms is expected before the year-end.
Worst to be truly over for Chinese tech stocks?
Last month, Chairman of China Banking and Insurance Regulatory Commission Guo Shuqing said that he expects significant progress in the ongoing crackdown on fintech firms before the year-end, reinforcing speculation that China’s campaign to rein in its tech giants may be receding.
He added that tech companies have responded positively to the feedback and about half of the proposed rectifications have already been implemented after Chinese authorities identified more than a thousand issues relating to the fintech operations of 14 internet platforms. According to Guo, “even more significant progress” before the end of the year is expected.
Investors have seized on any sign that the nearly one-year-old crackdown in China is entering its final stage and snapping up beaten-down tech stocks in recent weeks. A smaller-than-anticipated fine for food delivery giant Meituan earlier this month, as well as a Dow Jones report last Thursday suggesting that the cybersecurity agency is wrapping up its probe into Didi Global Inc., have added to the optimism. (Bloomberg)
Other positive news include record sales on last week’s Singles’ Day (11 November). Chinese online e-commerce company JD.com said consumers placed a record 349.1 billion yuan (US$54.7 billion) of orders during this year’s Singles’ Day shopping festival, while Alibaba’s Singles’ Day shopping festival posted record sales of 540.3 billion yuan.
The HSTECH which lost as much as 46% since February 2021 at the height of the tech crackdown in August, has gained 12% in the past month. Nevertheless, the HSTECH November futures index which is currently trading at 6,633 has been resisted around the 6,900 level since July 2021.