China tech stocks rip higher after Beijing revamps national technology leadership group

China’s technology-heavy ChiNext board posted its biggest daily gain in over a month on Thursday after China said it has revamped a national technology leadership group, signalling more policy support for the sector which is at the centre of the US-Sino trade war. Hong Kong stocks rose in tandem, gaining for a fourth straight day.

The group will be led by Premier Li Keqiang, who has chaired the original body which was formerly called the “National Technology and Education leadership Group” since 2013, along with Vice Premier Liu He as deputy, the government website said on Wednesday.

“The main duties are: to study the strategies for the country’s technology development strategies and major policies; to discuss major technology projects and to coordinate between the State Council and various departments on major technology issues,” the statement said.

The announcement comes as the US-China battleground is increasingly becoming focused on high-end technology after China undertook a major technology transformation designed to move its economy up the value chain.

China’s Nasdaq style ChiNext rose 3.4 per cent or 49.85 points to 1,497.61, marking the biggest daily gain since June 29. The CSI 300 Information Technology Index jumped 5.26 per cent, outperforming other sectors.

The overall CSI 300 increased 2.5 per cent or 83.02 points to 3,397.53 and the Shanghai Composite Index gained 1.8 per cent or 50.31 points to 2,794.38. Both CSI 300 and the Shanghai Composite closed at their highest levels in a week.

The Shenzhen Composite Index jumped 2.7 per cent or 38.94 points to 1,505.64.

Guangxi Fortune Technology rose 1.9 per cent to 3.26 yuan, Shanghai Dazhihui Software Develop added 1.8 per cent to 3.86 yuan and Guangxi Radio and TV Network gained 1.7 per cent to 4.68 yuan.

“China’s media sector is facing a turning point similar to that of the US in the 1980s where it transformed from mainly being advertising revenue-based into membership fee based,” said Liu Zhijing, China media and internet industry analyst at UBS Securities.

Liu forecast that China’s internet content subscription would reach 829 billion yuan (US$121 billion) by 2022 from current levels of 444 billion yuan.

In Hong Kong, the Hang Seng Index was up 0.88 per cent or 248.16 points at 28,607.30, rising for a fourth straight day. The Hang Seng China Enterprises Index climbed 1.1 per cent or 118.75 points to 11,019.93.

“Stocks rebounded on policy support from China amid a stabilising yuan,” said Kingston Lin King-ham, director of se

curities brokerage AMTD. “The market is eyeing the next resistance level at 29,000.”

China’s onshore yuan was changing hands at 6.8268 per US dollar, up 0.13 per cent from the previous day.

Kingdee International Software spiked 11.6 per cent to a record HK$10.76, Sinosoft Technology Group advanced 3.9 per cent to HK$2.97, and Chinasoft International leapt 5 per cent to HK$6.09.

Xiaomi gained 5.5 per cent to HK$18.08. Internet giant Tencent Holdings added 2.4 per cent to HK$372.60, contributing 65 points to the daily gain in the benchmark index.

However Aidan Yao, senior emerging Asia economist at AXA Investment Managers warned that Chinese tech companies were not cheap compared to their global peers.

“The average market cap of Chinese unicorns is higher than that of the US. While these valuations have corrected substantially from their 2015 peak, further declines are not impossible particularly if the US enacts tougher sanctions against Chinese firms,” Yao said.

A-Living Services, a property management services provider, surged 7.3 per cent to HK$14.80 after announcing a net profit of 332 million yuan (US$48.6 million), up 196.3 per cent year on year for the interim result ended June 2018.

Among property developers, China Evergrande Group climbed 5.4 per cent to HK$26.25, Sunac China Holdings gained 7.4 per cent to HK$24.75 and Country Garden Holdings was 3 per cent higher to HK$11.76.

China Mengniu Dairy also jumped 4.6 per cent to HK$24, becoming the best-performing Hong Kong blue chip.