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Chinese Tech Stocks Experience Significant Recovery
In a notable turnaround, Chinese technology stocks, particularly those that have faced considerable decline, experienced a rally this week, reaching heights not witnessed in over a year. This surge follows the announcement of economic stimulus measures by China’s central bank aimed at rejuvenating the nation’s economy.
The Hang Seng Tech Index, which comprises many of the major Chinese tech companies, achieved nearly a 6% increase, marking its peak since early August 2023. Over the course of the week, the index has climbed by approximately 20%.
Alibaba Group, a key player in e-commerce, closed above $100 per share in the U.S. for the first time since August 2022, posting a remarkable 10% gain during the session on Thursday. The company’s stock listed in Hong Kong also reached its highest mark since February 2023, ending the day at 102.50 Hong Kong dollars, which represents a nearly 5% increase. Throughout the week, Alibaba’s shares in Hong Kong surged approximately 18%.
Tencent Holdings, which operates WeChat and ranks as one of the largest gaming companies globally, saw its stock rise nearly 2%, closing at 437.80 Hong Kong dollars per share. This increase is particularly significant as it reflects Tencent’s highest closing price in over two and a half years, bolstered by a robust recovery in its gaming division—evident from a nearly 49% rise in its stock price this year.
Meituan, a major food delivery service, also recorded gains, with shares increasing by 8% to close at 164.60 Hong Kong dollars, marking the highest level since February of the previous year.
The surge in the market is largely attributed to the People’s Bank of China’s recent decision to decrease the reserve requirements for banks. The central bank has also committed to supporting the beleaguered property market by extending existing measures and lowering interest rates on current mortgages.
These initiatives reflect the government’s strategy to invigorate the economy, which has faced challenges in recent times. Before these announcements, investor sentiment towards Chinese tech stocks like Alibaba and Meituan had been notably cautious, primarily due to their susceptibility to shifts in the economy and consumer spending.
Adding to the positive outlook, influential investors have begun expressing bullish sentiments towards Chinese equities. Billionaire hedge fund manager David Tepper, speaking on CNBC, revealed that following recent interest rate cuts by the U.S. Federal Reserve, he acquired additional shares in Chinese companies, including Alibaba and Baidu.
Other notable tech stocks, such as JD.com and Baidu, also reported share price increases this week.
Despite this week’s encouraging developments, it is important to note that Chinese tech stocks are still considerably below their all-time peaks from 2021.
– CNBC’s Evelyn Cheng contributed to this report.
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