For Chinese Tech Stocks, No News Is Good News

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The Hang Seng Tech Index is back 11% after hitting a trough last week

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After nearly a year of siege, the region was benefiting from a lack of new measures, said Qi Wang, CEO of MegaTrust Investments (HK).

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“The Chinese government now needs to give companies time to digest and comply with these new rules,” Mr. Wang said.

Shares of Meituan and JD.com jumped 9% and 11%, respectively, in Hong Kong trading. This helped raise the city’s Hang Seng Tech Index by 5%.

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The index, which was launched in July 2020, has now recovered nearly 11% as it hit a record low last Wednesday, the same day that China’s antitrust watchdog imposed small fines on Alibaba Group Holding. Ltd.

, biliblic Inc.,

and Tencent Holdings Ltd.

The gauge fell by about a third last year.

Chetan Seth, Asia-Pacific equity strategist at Nomura, said that several small rallies have subsided in recent months, but if the slow pace of regulatory action continues, this rally could prove more sustainable. He added that “the companies themselves are poised for some very exciting long-term investment topics.”

David Chao, global market strategist for Asia-Pacific at Invesco, said his firm has taken a “much more constructive approach” in Chinese stocks, especially tech, for this year than last year.

As of Tuesday, shares of sector heavyweight Tencent traded at nearly 24 times expected earnings, as data compiled by Refinitiv showed, down from 29 times a year ago.

Other major gainers on Wednesday included Alibaba, Baidu Inc.

and Bilibili, whose Hong Kong-traded shares rose about 6% each. All three are listed in the US as well.

Some market watchers are wary. Marcella Chou, global market strategist at JPMorgan Asset Management, said the annual meeting of China’s legislature, the National People’s Congress, in March should provide more regulatory certainty.

“Frankly, we’re just taking a wait-and-see approach so far. [there is] More policy clarity on the China tech sector,” Ms Chou said.

Write Rebecca Feng at [email protected]

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