Hang Seng Index jumps 3% as tech stocks pop
Hang Seng Tech Index enjoys largest gains in over six weeks
Hong Kong’s Hang Seng index closed 3% higher on Thursday, as investors and traders continued to balance their desire for cheap technology stocks with the continued anxiety regarding the fate of Evergrande Group.
Regulatory crackdowns of many sectors, from education technology to video gaming, undid much of the progress achieved by China’s rapid return to normality from the COVID-19 crisis.
The recent liquidity crisis engulfing Evergrande, the world’s most indebted real estate developer, further soured investor sentiment, despite substantial levels of daily liquidity injections from the People’s Bank of China.
On Tuesday, the index slumped to a new 2021 low of 23,681.44, down 14.6% in the past three months.
Thursday’s rebound came after indications that US lawmakers are within touching distance of an agreement to avoid a government debt default and shutdown.
Opinion was further buoyed by news that US President Joe Biden and Chinese leader Xi Jinping will meet virtually to discuss mutual interests. Until recently, the two leaders had not spoken to each other for some months, prompting anxiety as to the state of Sino-US relations.
A surge in technology stocks drove the index higher. The Hang Seng Tech Index enjoyed its largest gain in over six weeks, rising by 5.2%.
News that Warren Buffett’s close associate Charlie Munger had increased his company’s stake in Alibaba by 83% to over 300,000 shares in the third quarter, added further momentum.
Munger, who has a net worth of over $2bn, made headlines in June when he vocally supported the Chinese government’s backlash of Jack Ma after the Alibaba founder made a speech criticising excessive regulation.
The American investor said that the “Communists did the right thing”, before adding: "I don't want all of the Chinese system, but I certainly would like to have the financial part of it in my own country.”
Alibaba traded up 7.2% on Thursday at HK$147.30, 35% below its 2021 starting level.
Among other leading Hong Kong-listed tech stocks, Meituan and and Kingsoft enjoyed some of the largest gains, rising by 9.7% and 8.9%, respectively.