Chinese tech stocks rally to start week
Chinese technology shares climbed on Monday after recording their best weekly advance since January as bargain hunters continued to load up on the beaten-down sector.
The hang Seng Tech Index rallied 1.1 percent, led by live streaming giant Kuaishou Technology and Alibaba health Information Technology Ltd. Food delivery company Meituan erased earlier losses and rose 1.5 percent ahead of its results, which showed second-quarter revenue beating estimates while losses continued.
The rally came despite a barrage of headlines of new rules for the tech sector, including a campaign to crack down on social media accounts that misinterpret domestic financial topics and the proposal for a credit rating system to regulate live streaming companies. Beijing has expanded its clampdown on private industry to tutoring companies and online gaming in a bid to reduce the wealth gap.
“We may have seen the near-term bottom of the market, after months of selloffs,” said Castor Pang, head of research at Core Pacific Yamaichi International h.k. Ltd. “Although investors are still very sensitive about negative regulations, shares managed to bounce back recently despite negative news from time to time.”
Mainland investors remained net sellers of hong Kong stocks for a fourth consecutive trading session. They offloaded hk$4.2 billion ($536 million) worth of shares via the trading links with Shenzhen and Shanghai. The hang Seng Index closed 0.5 percent higher, while the CSI 300 Index fell 0.3 percent.
Among the losers, entertainment and medical beauty stocks continued to be hammered on Monday. Citigroup Inc. analysts said China’s new guidelines on regulating the “fan-based economy” could mean negative financial impact on the sector in the near term. Meanwhile, China is seeking to rectify illicit advertising in the cosmetic surgery industry.
Brokerage stocks also slipped after the securities regulator pushed firms to step up oversight of their margin-financing businesses, a person familiar with the matter said. The CSI Financials subgauge dropped 2.1 percent, with Orient Securities Co. Ltd. and GF Securities Co. Ltd. both slumping by their 10-percent daily limit.