JD.com, Alibaba jump at least 6 per cent as JPMorgan’s change of heart sees Chinese tech stocks lead big gains in Hong Kong
- JPMorgan said in a report that uncertainty around technology stocks was starting to recede after a slew of recent regulatory announcements
- Market sentiment was also boosted by news that Shanghai, the mainland’s financial capital, plans to reopen in phases starting next month
An exodus of capital from the city lingered, pushing the Hong Kong dollar down to 7.85 against the US currency, the lowest end of its trading band, for a sixth consecutive day. A breach of that level would trigger an intervention by the Hong Kong Monetary Authority to protect the local currency’s peg to the US dollar.
The rating change, issued on Monday, was a reversal of the US bank’s bearish call in March that called China’s tech sector “uninvestable.” Bloomberg later reported that the word – which sparked a massive sell-off – had been published in error.
“Looking at the market in a one-year horizon, stocks have fully priced in the fallout of the pandemic and the geopolitical risk,” said Lu Bin, chief investment officer at HSBC Jintrust Fund Management in Shanghai. “Opportunity overrides risks now.”
China’s top political advisory body held a special symposium on Tuesday to promote the digital economy, seen by traders as another sign that Beijing will ease off on its scrutiny of the tech industry.
Alibaba, the owner of this newspaper, rallied 7 per cent to HK$90.55 and Tencent gained 5.3 per cent to HK$368.40. Kuaishou Technology rose 5 per cent to HK$71.75 and NetEase added 6.4 per cent to HK$151.20.
JPMorgan lifted its recommendation on the four stocks to overweight from underweight, while raising the rating on JD.com, Baidu and Bilibili to neutral from underweight.
“Significant uncertainties facing the sector should begin to abate on the back of recent regulatory announcements,” analysts led by Alex Yao wrote in the report on Monday.
SMO ClinPlus, which provides clinical research service, surged 59 per cent to 74.64 yuan on its first day of trading in Shenzhen.