Chinese tech stocks shot up in Hong Kong on Friday, with e-commerce giants JD.com and Alibaba both rising by more than 10% in afternoon trading.
The stock surge followed reports of a possible resolution to the auditing dispute between China and the US over Chinese stocks listed on US exchanges, speculation that the government will ease its crackdown on the tech sector, plus a vow from the Politbureau to support the economy.
Asian shares looked set for their best day in six weeks after concerns on multiple fronts – expanding Covid lockdown in major Chinese cities, rate hikes in the US and negative impacts from the Russian war in Ukraine.
E-commerce giants JD.com, Alibaba and Meituan were up 14.5%, 14% and 14% respectively at about 8.30am GMT, with the Hang Seng Index lifted by nearly 4%.
All three are listed in both the US and Hong Kong bourses. They and their peers’ stock prices had been affected by US moves to delist Chinese companies because Beijing restricted the US audit regulator’s access to their audit documents.
Reports on Friday that a resolution to the dispute was in sight had driven the sharp gains, said Steven Leung executive director of institutional sales at brokerage UOB Kay Hian in Hong Kong.
The gains from Chinese index heavyweights sent MSCI’s broadest index of Asia-Pacific shares outside Japan 1.9% higher, which would be its best day since March 17.
Also helping was the Politburo, the top decision-making body of China’s Communist Party, saying China will step up policy support to stabilise the economy, and a strong Wall Street after robust earnings from Facebook parent Meta Platforms had driven the Nasdaq 3% higher overnight.
However, Nasdaq futures fell around 0.7% in Asia trade, pressured by disappointing earnings from Amazon after market close.
European futures rose 1.29% and FTSE futures advanced 0.86%.
Longer Term Fears
Friday’s gains marked a recovery to the brutal sell-offs in globally stocks in recent weeks. The Asian regional benchmark is heading for a 5.6%% drop for the month, its worst month since July 2021.
Until Friday’s gains, it was set for its worst month in two years.
“There are four near-term catalysts driving the market at the moment: US. earnings which we are about half way through, rising US Treasury yields and lots of hawkish speak from the Fed, the war in Ukraine, and China policy,” said Fook-Hien Yap, senior investment strategist at Standard Chartered Wealth Management.
Yap believes Asian shares have room to rise further as much of the bad news was already priced in, though a strong rally in risk assets like equities would need US yields to steady.
Meanwhile, weakness in China’s yuan gathered pace on Friday, putting the currency on track for its biggest monthly drop since 1994, pressured by broad dollar strength and lockdowns in many major cities to curb the spread of Covid-19.
• Jim Pollard with Reuters
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