Chinese tech stocks saw a notable surge this week, with companies like Alibaba and Tencent hitting levels not seen in over a year. This rally comes on the heels of China’s central bank announcing measures aimed at revitalizing the world’s second-largest economy.
The Hang Seng Tech Index, which tracks major Chinese tech firms, closed nearly 6% higher, marking its strongest close since early August 2023. The index has risen by 20% this week alone, fueled by renewed investor confidence.
Alibaba’s shares in the U.S. crossed the $100 threshold for the first time since August 2022, jumping 10% during Thursday’s session. In Hong Kong, the company’s stock closed at its highest level since February 2023, rising nearly 5% to 102.50 Hong Kong dollars. Over the week, Alibaba’s Hong Kong-listed shares have climbed by around 18%.
Tencent, which operates China’s dominant messaging app WeChat and is one of the world’s largest gaming companies, closed up nearly 2% at 437.80 Hong Kong dollars per share. This marks the company’s highest close in over two and a half years, driven by a 49% rally this year, largely thanks to a recovery in its core gaming business.
Meituan, the food delivery leader, saw its shares rise by 8% to 164.60 Hong Kong dollars per share, reaching a level not seen since February 2023.
The surge in Chinese tech stocks follows the People’s Bank of China’s announcement of a reduction in the cash reserves that banks are required to hold. The central bank also introduced measures to bolster the struggling property market, including extending existing support policies for two more years and lowering interest rates on existing mortgages. These actions are aimed at stimulating growth in the broader Chinese economy.
Prior to these stimulus measures, investors were cautious about tech stocks like Alibaba and Meituan, which are closely tied to the health of China’s economy and consumer activity. However, big-name investors are now turning optimistic. Hedge fund billionaire David Tepper told CNBC on Thursday that he increased his holdings of Chinese stocks, including Alibaba and Baidu, after the U.S. Federal Reserve cut interest rates this month.
Other Chinese tech firms, including JD.com and Baidu, also experienced significant share price increases this week. Despite this recent upswing, Chinese tech stocks remain well below the all-time highs they reached in 2021.
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