Alibaba and other Chinese tech stocks have been beaten down amid regulatory pressures.
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Alibaba and other Chinese tech stocks roared higher on Wednesday as a wave of videogame approvals from regulators in China boosted sentiment on the sector.
China’s gaming regulator greenlit the publishing licenses for 60 games on Tuesday, the first list of approved videogames since the end of April, Reuters reported. It’s a sign of easing regulatory pressures for gaming stocks in particular and the tech sector at large.
A crackdown by regulators in both China and the U.S. has poured water on Chinese tech stocks—especially those listed in New York—which are among the biggest companies in the world’s second-largest economy. E-commerce giant Alibaba (ticker: BABA) lost almost 50% of its market value in 2021 alone, with much of the rest of the sector notching losses of a similar scale.
The regulatory scrutiny spread to videogames last summer. While Chinese government officials have signaled in recent months that they would work to clarify the regulatory picture for tech stocks, investors continue to face uncertainty over issues including possible de-listings in the U.S. and data security rules in China.
This week’s approval of a spate of videogames represents incremental progress on the regulatory front. “We believe the approval announcement will also send positive signal of policy support to the overall China Internet sector,” writes Citi analyst Alicia Yap.
Did it ever. In premarket trading Wednesday, Alibaba stock has rallied 4.6% to $109.05, its highest level since early April, after gaining more than 5% on Tuesday while NIO (NIO) stock and JD.com (JD) both gained 4%. Hong Kong’s Hang Seng Tech Index—which includes the Asian-listed shares of many U.S.-listed Chinese tech stocks—ended the day almost 5% higher.
Videogame maker NetEase (NTES) lifted 4% in the premarket while peer Tencent (0700.H.K.) popped 6% in Hong Kong—indicating how widely the gaming approvals are being felt, considering neither company had games approved in the recent batch.
Write to Jack Denton at [email protected]
