Alibaba Group Holding Ltd. led an advance in US-listed Chinese stocks on Wednesday, with Ant Group Co.’s approved fundraising plan boosting optimism that China’s regulatory clampdown on its internet sector is easing.
(Bloomberg) — Alibaba Group Holding Ltd. led an advance in US-listed Chinese stocks on Wednesday, with Ant Group Co.’s approved fundraising plan boosting optimism that China’s regulatory clampdown on its internet sector is easing.
Alibaba, which owns a stake in Ant, rallied 13% in its biggest one-day gain since June, while its trading volume surged to around 200% of the three-month average. Its e-commerce peers JD.com Inc. and Pinduoduo Inc. also traded up 15% and 7.7% respectively.
Up 8.6% on the day, Nasdaq Golden Dragon Index surged 13% over the first trading sessions of 2023, the best start to a year on record, according to data compiled by Bloomberg dating back to 2001. The rally came amid bets that China’s reopening will eventually boost the economy and corporate profits despite initial disruptions.
Regulators approved a plan by Jack Ma’s Ant to raise 10.5 billion yuan ($1.5 billion) for its consumer unit, removing a hurdle before the fintech giant restarts its initial public offering shelved in 2020. The news pointed to warmer ties between Chinese authorities and the country’s biggest tech firms, as officials placed economic growth as a top priority.
“China went from being the problem child last year that no one wanted to invest in, to what we call the ‘let’s move on phrase.’ Let’s move on from Covid, let’s move on from regulations and let’s focus on the economy,” said Nuno Fernandes, a portfolio manager at GW&K Investment Management, who saw the Ant news as a “big surprise” to most institutional investors. “Many investors are finding themselves shocked or super underweight on China equities, and to correct that in the face of a very fast change.”
Adding to the optimism is further potential policy support to the housing sector, a key weak spot in China’s Covid-hit economy. Beijing is planning to help shore up balance sheets of some developers it deemed as “systemically important,” according to a Bloomberg report. Authorities also resumed approvals for private equity funds to raise money for residential property developments.
With Wednesday’s advance, the Hang Seng China Enterprises Index, a gauge tracking major Hong Kong-listed Chinese stocks, closed at its highest level since July. A pickup in mobility in some major cities has given hope that Covid caseload may have peaked, after the highly infectious virus pushed the country’s economic activity to the slowest pace since February 2020.
(Updates prices, adds chart and comment in the fifth paragraph.)
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