Fiona Nanna, ForeMedia News

5 minutes read. Updated 8:13AM GMT Fri, 27 September, 2024

In a dramatic turn of events, Chinese tech stocks surged to 13-month highs this week following a series of economic stimulus measures from Beijing. The tech-heavy Hang Seng Tech Index, which lists major Chinese technology firms, climbed nearly 6% on Friday, marking its highest close since August 2023. This 20% weekly gain signals growing optimism in the market, especially after months of volatility.

Alibaba and Tencent Lead the Charge

Among the top performers, Alibaba Group closed above $100 per share for the first time in over a year, ending Thursday’s session with a 10% jump in the U.S. markets. Its Hong Kong-listed stock followed suit on Friday, reaching its highest level since February 2023, up nearly 5% to HKD 102.50. For the week, Alibaba’s shares in Hong Kong are approximately 18% higher, showcasing renewed confidence in the e-commerce behemoth.

Tencent, the tech giant behind WeChat and one of the world’s leading gaming companies, also surged. The company’s Hong Kong-listed shares closed at HKD 437.80, marking a near 2% rise and its highest level in over two-and-a-half years. Year-to-date, Tencent’s stock has rallied approximately 49%, driven by a resurgence in its core gaming business.

Meanwhile, food delivery and services titan Meituan posted an 8% gain on Friday, closing at HKD 164.60, its best performance since February 2023. The uptick in Meituan’s stock price is a clear indication that investor sentiment is turning bullish on Chinese consumer tech companies.

China’s Central Bank Intervenes

The stock rally comes on the heels of the People’s Bank of China (PBoC) unveiling new measures designed to stimulate the world’s second-largest economy. Key among these was a cut in the reserve requirement ratio (RRR), reducing the amount of cash that banks must hold in reserves. This move is intended to encourage lending and liquidity in the market, particularly within the struggling real estate sector.

Further measures include extending support for the flailing property market by two years and lowering interest rates on existing mortgages. These steps are seen as vital to revitalizing China’s economy, which has shown signs of slowing amid a challenging global economic environment.

Before these interventions, investors were wary of China’s tech giants, such as Alibaba and Meituan, due to their heavy reliance on consumer demand and the overall health of the Chinese economy. However, the recent policy changes have restored some optimism in these companies.

Billionaire Investors Turn Bullish

Adding to the growing confidence, David Tepper, the billionaire founder of hedge fund Appaloosa Management, revealed in an interview with CNBC that he has ramped up his investments in Chinese stocks. Tepper cited the U.S. Federal Reserve’s recent decision to maintain interest rates and added that he has significantly increased his stake in Chinese companies like Alibaba and Baidu.

Other tech stocks such as JD.com and Baidu also experienced gains this week, further underscoring the broader market recovery.

A Cautious Recovery

Despite the strong weekly performance, it is important to note that Chinese tech stocks are still far from their all-time highs recorded in 2021. The recovery remains fragile, and much depends on how effectively the Chinese government can navigate its economic challenges, including the ongoing property sector crisis.

Investors and analysts are watching closely to see if this upward trend can be sustained, especially as global economic conditions remain uncertain.

Meta Description: Chinese tech stocks, including Alibaba and Tencent, soar to a 13-month high after Beijing’s central bank announces economic stimulus measures aimed at boosting the world’s second-largest economy. #Alibaba #Tencent #Chinatech #HangSeng