Chinese Tech Giants Surge After Beijing Pledges to Support Sector

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By Yifan Wang

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Chinese tech stocks surged on Friday, driven by top-level officials’ pledge to support the sector, as well as rising hopes that US-traded Chinese companies could preserve their listings in New York.

Shares of Alibaba Group Holding Ltd. jumped as much as 16%, while Meituan gained up to 19% and JD.com Inc. was 13% higher. The tech sector benchmark Hang Seng TECH Index was last 8.8% higher as of mid-afternoon.

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China’s Politburo, one of the country’s top policy-making bodies, on Friday said the government should “promote the healthy development of the platform economy” and “introduce specific measures to support the platform economy’s compliant, healthy development.” Officials also said the government should normalize regulations on the sector.

The market had been looking forward to the monthly meeting, headed by President Xi Jinping, for indications of China’s policy direction after its economic growth slowed sharply in the first quarter. Investors have also grown concerned about a further deterioration in the second quarter following Covid-related lockdowns in many Chinese cities.

Chinese leaders at the meeting also vowed to meet government-set economic targets this year and step up policy support for its economy.

While the government’s latest comments on the internet sector weren’t significantly different from its earlier messages, analysts said the officials’ show of support still meant a lot, especially at a time of broad market weakness and intensifying macroeconomic fears.

“Any little good news could spur the sentiment easily,” said UOB Kay Hian analyst Chun Sung Oong.

Analysts also said the stocks were supported by a Bloomberg report on Friday, citing unnamed sources, that Beijing is in talks with the US to allow American regulators to conduct on-site audits of Chinese companies listed in New York.

China has been blocking such access, leading to the risk that US-listed Chinese stocks would be delisted. The US passed a law in late 2020 that threatened to ban the trading of foreign companies on US exchanges if they didn’t submit to US inspections for three consecutive years.

Write to Yifan Wang at [email protected]

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Credit: www.marketwatch.com /

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