(Bloomberg) — U.S.-listed Chinese stocks jumped across the board on Friday with tech shares leading the gains after Beijing pledged more stimulus to rescue an economy hampered by extended Covid lockdowns and to support the development of tech platform companies.
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E-commerce giant Alibaba Group Holding Ltd. ended the day up 6.8%, after earlier jumping as much as 13.9%. Peer JD.com gained 6.7% and Pinduoduo Inc. rose 13.5%. The Nasdaq Golden Dragon China index, up more than 4.5% to its highest level in 10 days, pared its monthly loss to roughly 5%. The rally in the group tracks a 10% advance in the Hang Seng Tech Index, its best one-day performance since Beijing vowed to stabilize financial markets on March 16.
The Chinese Communist Party’s Politburo pledged to deliver on economic targets and support healthy growth of internet platform companies, according to a statement following a quarterly economic meeting chaired by President Xi Jinping. Officials vowed to speed up implementation of supportive measures, including tax cuts and fee reductions, while sticking to the Covid Zero policy.
READ: Xi’s Vow to Boost Growth While Locking Down Met With Skepticism
The tone in “strategic intents” from the Politburo is very much pro-growth versus the previous year, which was more pro-fairness in the sharing of prosperity, said Jason Hsu, chief investment officer of Rayliant Global Advisors Ltd. “The Chinese ADRs are rallying in response specifically to the statement about a positive collaborative relationship between the government and China’s platform techs. The interpretation is that we have seen the last of the regulatory crackdowns.”
The comments came amid a South China Morning Post report that China is planning a symposium with ‘Big Tech’ after the Labor Day holiday.
READ: China’s Politburo Ignites Market Rally With Vows on Growth, Tech
“Considering the difficult macro environment due to the pandemic, tech companies should help the economy recover and to further grow,” said Henry Guo, an analyst at M Science. “It appears the Chinese government has become supportive.”
Still, today’s rally wasn’t enough to stop the Nasdaq Golden Dragon China Index from falling for the sixth consecutive month, the longest such stretch since at least 2001.
“The market is excited by the current headlines, but to see this rally sustained we need to move from talking the talk to walking the walk,” Sharif Farha, a portfolio manager at Safehouse Capital, said in emailed comments. “Investors are looking for an excuse to buy China tech, so it’s up to the Chinese policy makers to give them one.”
(Updates with close prices and second chart)
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