Tag Archives: HK:700

Business

Alibaba and JD.com soar as China pledges to support markets

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Chinese- and Hong Kong-listed stocks soared on Wednesday after China’s government pledged to support beleaguered markets.

The Hang Seng
HSI,
+9.08%
surged 9% as state-run Xinhua News Agency said the government would take a number of market-friendly steps.

The Shanghai Composite
SHCOMP,
+3.48%
rose 3.5%.

China’s financial stability and development committee called for monetary policy to support the economy, and that authorities should prudently introduce policies that have a contractionary impact.

The Chinese government also is working with U.S. authorities to support listings overseas, as the Securities and Exchange Commission last week identified Chinese companies that could be delisted over the issue of auditor access.

JD.com
9618,
+35.64%

JD,
+7.08%
jumped 36%, Alibaba
9988,
+27.30%

BABA,
-1.29%
rallied 27% and NetEase
9999,
+23.40%

NTES,
+3.79%
surged 23% in Hong Kong trade.

Other Hong Kong tech stars also jumped, including Meituan
3690,
+32.08%
and Tencent Holdings
700,
+23.15%.

The committee also said it would keep Hong Kong’s financial markets stable while enhancing regulatory communications and coordination with Hong Kong regulators.

“Having disappointed markets earlier in the week by not cutting interest rates, China’s state economic policy apparatus is taking significant coordinated steps to support risk sentiment. These include State Council support for overseas listings, engaging with the U.S. on ADRs, and perhaps most importantly, suggesting that regulation of its big tech firms will end soon. There are also promises to step-up support for the real estate sector,” said Stephen Innes, managing partner at SPI Asset Management.

Even with Wednesday’s surge, the Hong Kong index is down 14% this year, compared to the 11% drop for the S&P 500
SPX,
+2.14%.

The remarks didn’t address another factor that’s been weighing on Chinese stocks, the possibility of sanctions from the U.S. if the country provides arms to Russia.

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Business

Tencent and other gaming stocks tumble after China news outlet labels them ‘spiritual opium’ for teens

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Accusations of “spiritual opium” sent shares of the China multinational technology group Tencent and other companies in the gaming industry tumbling on Tuesday amid fears a new regulatory chapter was about to begin.

Tencent
700,
-6.11%
stock tumbled 5% while NetEase
9999,
-7.77%

NTES,
+2.77%
and XD
2400,
-8.12%
each fell 8% in Hong Kong trade.

The losses came after an article in the Economic Information Daily, which has links to China’s state-controlled news agency, Xinhua, said the gaming industry, especially Tencent, was harming the nation’s teens, according to media reports.

While the South China Morning Post subsequently reported the story has been taken down, investors were rattled by fears that yet another regulatory crackdown could be coming. That’s even as the South China Morning Post pointed out the article didn’t appear to represent Beijing’s position on that industry, noting positive comments from an official recently.

China is the world’s biggest videogame and esports market, according to PwC China, with combined revenue reaching $31.5 billion last year. The revenue share of app-based social and casual games in China is forecast to reach 71.8% of overall videogame revenue by 2025, and a chunk of Tencent’s revenue stems from gaming.

A wave of separate crackdowns on technology companies, including Tencent’s music unit, ride-share giant Didi Global 
DIDI,
+0.68%
and education companies, have been hitting China stocks, as well as their U.S.-listed shares in recent weeks.

Read: Ray Dalio says Chinese stocks still ‘important part’ of a portfolio after crackdown

“After the last few weeks, even oblique warnings from authorities are ignored at your peril, and it seems that regulatory risk is alive and well in China still,” said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA, in a note to clients.

Also: Videogames entered the mainstream for good in the pandemic, but the industry faces a rough transition

Tencent appeared to be responding to the potential threat as it announced online time limits for minors who want to play its games, and said it would ban those under 12 years old from spending any money on those, according to a statement on a WeChat account reported by Bloomberg.

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Business

Chinese Tech Stock Selloff Deepens

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HONG KONG—A massive selloff in Chinese technology stocks accelerated on Tuesday, as investors unnerved by China’s widening crackdown on Internet companies and other industries sold down their holdings of many popular stocks.

The Hang Seng Tech Index in Hong Kong, which includes stocks such as Tencent Holdings Ltd. and Alibaba Group Holding Ltd. , crashed 8%, registering its third day of declines. The city’s flagship Hang Seng Index dropped 4.2%.

In mainland China, the CSI 300 benchmark retreated 3.5%. The Chinese yuan weakened against the dollar, with the offshore currency trading beyond 6.50 yuan per dollar, versus a previous close of 6.4834, according to FactSet.

Among big individual stocks, online gaming and social-media giant Tencent fell 9%. The selloff pushed Tencent’s market value down to about $544 billion, according to FactSet—meaning it has lost about $390 billion of market capitalization since peaking in mid-February. Hong Kong-listed shares in Alibaba, China’s biggest e-commerce company, also lost ground, falling 6.4%.

China is months into a campaign to rein in big tech that has spanned issues such as data security, monopolistic behavior and financial stability. The regulatory clampdown, which has entangled companies such as Alibaba, its sister company Ant Group Co., and the ride-hailing giant Didi Global Inc., continues to unfold.

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Business

China’s Love of TikTok-Style Apps Powers $5 Billion IPO

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Kuaishou Technology has its eyes on the world’s biggest initial public offering in more than a year, seeking to raise about $5 billion from a Hong Kong share sale as short-video and live-streaming apps surge in popularity in China.

Kuaishou—which competes with ByteDance Ltd., the rival Chinese company behind TikTok and its sister app Douyin—started taking investor orders Monday. With the offering, which could value it at more than $60 billion, Kuaishou is joining a string of tech companies from China that have listed in Hong Kong.

Kuaishou, which means “fast hand” in Chinese, is backed by Tencent Holdings Ltd. It was co-founded by Su Hua and Cheng Yixiao, software engineers who previously worked for Google China and Hewlett Packard , respectively.

Both Kuaishou and ByteDance have capitalized on growing demand from younger Chinese people to watch and record short videos on their smartphones. Its namesake short-video platform is the world’s second-largest, according to data cited in its prospectus, and there were 305 million average daily active users of its apps and mini-programs in China for the nine months as of September.

With a minimum deal size of $4.95 billion, the IPO would be the largest in the world since late 2019, when state-controlled Saudi Arabian Oil Co., commonly known as Aramco, raised $29.4 billion, Dealogic figures show.

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