Chinese tech stocks stage rebound after 5-week sell-off

Hang Seng Tech Index advances after Cathie Wood joins bargain hunters

Chinese technology stocks rallied for a second day as bargain hunters returned, emboldened by Tencent Holdings’ share buyback and strong results from Jd.com, which drew Cathie Wood back into the market.

The Hang Seng Tech Index advanced more than 7 per cent, adding to a 2 per cent gain on Monday, after a five-week rout that took the gauge to the lowest level since its inception last year. Heavyweights Tencent and Alibaba Group Holding climbed 8.8 per cent and 9.5 per cent, respectively.

While there’s no indication that the nation’s regulatory crackdown will ease, the absence of significant new initiatives in recent days opened the door to investors who see longer-term value in China stocks. Some are also taking a cue from technical charts that show the index plunged into oversold territory last week.

“We are seeing lots of bottom-fishing activities in the market, including strong buying of Tencent and Alibaba,” said Jackson Wong, asset management director at Amber Hill Capital. “Companies that have fallen the most and prove to have solid fundamentals will lead the rebound.”

Wood’s Ark Investment Management bought American depository receipts of Jd.com on Monday after its quarterly sales beat estimates. The purchases by the thematic tech-focused global investment firm come after it had earlier this year reduced its China holdings to a negligible amount.

The e-commerce company’s revenue jumped 26 per cent in the three months through June, while company executives said they didn’t see a major impact coming from new curbs on data collection and usage.

Jd.com shares closed 15 per cent higher on Tuesday, their biggest gain ever.

The gain in Tencent stock Tuesday was the largest July 29 and followed its buyback of 230,000 of its own shares on Monday.

Alibaba’s advance came after it dropped to a record low in Hong Kong on Monday. Food delivery giant Meituan climbed 14 per cent.