Hong Kong stocks rallied as Alibaba Group Holding, Tencent Holdings and Meituan rebounded, halting the biggest sell-off in tech stocks in seven weeks amid concerns about China’s clampdown on domestic monopolies.
The Hang Seng Index closed almost 1 per cent higher at 26,568.49 for its biggest rally since December 16. A gauge tracking 31 of the bourse’s biggest technology companies jumped 2.6 per cent. The Shanghai Composite Index declined 0.5 per cent to 3,379.04, after fluctuating between gains and losses earlier.
Alibaba Group Holding surged 5.7 per cent to HK$222 from near a six-month low while Tencent added 2.2 per cent to HK$530.50 and Meituan rose 5.2 per cent to HK$273.40. The ATM trio bore the brunt of bashing on Monday which sent the Hang Seng Tech Index to a 4.3 per cent loss, its biggest slump since November 11. ZTE Corp surged by 7.8 per cent to HK$19.44.
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Investors dumped Alibaba, the owner of this newspaper, and some of its listed affiliates and industry peers on Monday after Chinese regulators tightened its oversight and controls on internet-platform operators and stepped up efforts to tackle so-called “disorderly capital expansion” in the industry.
“The declines were too big for the past two days, traders have bought the dips on expectation that they will rebound,” said Castor Pang, head of research at investment services firm Core Pacific-Yamaichi. “Concerns [over Beijing’s sweeping antitrust campaign] have not been reduced.”
The clampdown appears to bring a sobering end to a year of frenzy after investors booked huge profits betting on the power and dominance of technology companies during the coronavirus pandemic. The Hang Seng Tech Index, launched in July, has rallied about 70 per cent based on simulated year-to-date performance, while the benchmark Hang Seng Index fell by 5.8 per cent.
Stocks rallied despite the Trump administration on Monday strengthening an executive order barring US investors from buying securities of companies allegedly with ties to the Chinese military.
On the mainland, companies on the forefront of pushing fifth-generation technology gained. Xiao Yaqing, head of the Ministry of Industry and Information Technology, said China will advance the 5G network construction and application next year and set up more than 600,000 5G stations.
Youzu Interactive added 2.5 per cent to 12.27 yuan. It fell 10 per cent on Monday, after its chairman and chief executive died on Christmas Day as police probed a suspected poisoning case.
New stock listings were mixed. Automated electric equipment producer Suzhou Veichi Electric soared by 86.2 per cent to 20.02 yuan in Shanghai. In Hong Kong, China Gas Industry Investment surged by 18.2 per cent to HK$1.62, while Huisen Household International dropped 1.7 per cent to HK$1.80.
“The rebound of tech stocks and the US approval of stimulus package have a positive impact on the market,” said Gordon Tsui, chairman of Hantec Pacific. The HSI will not have much change in the final two trading days of this year, he said, adding it will fluctuate between 26,500 and 26,800.
Elsewhere, Asian stocks rallied, tracking a record close in US equities overnight after President Donald Trump signed a US$2.3 trillion stimulus package. Japanese stock closed 2.7 per cent higher to a level not seen since January 4, 1991. Stocks in Singapore, Australia and South Korea rose by more than 0.3 per cent.
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