Chinese tech stocks waver on valuation hunt, while Weibo slides below IPO price on Hong Kong debut

  • Traders seek bargains from a 26 per cent crash in technology stocks that has erased US$606 billion in value over the past six months; Alibaba pares some gains from its record 12 per cent rally on Tuesday
  • Weibo, China’s Twitter-like social media platform, slumps almost 7 per cent in Hong Kong trading debut

Chinese technology stocks wavered as traders continued to scoop up bargains in the sector, which has crashed 26 per cent to a record low over the past six months. Weibo slumped on its Hong Kong trading debut.

The Hang Seng Tech Index was unchanged at the noon break after rising by as much as 0.8 per cent, adding to a 4.2 per cent rally a day earlier. The Hang Seng Index, which tracks sentiment on the broader market, slipped 0.1 per cent to 23,954.91 after a 2.7 per cent surge on Tuesday. China’s Shanghai Composite Index added 0.9 per cent.

Chinese video-platform operator Bilibili led the technology advance, climbing 1.1 per cent. Meituan gained 0.3 per cent and Tencent Holdings added 0.7 per cent. Alibaba Group Holding, which owns this newspaper, slid 5.1 per cent, paring some of its record 12 per cent rally on Tuesday.

Chinese technology juggernauts listed in Hong Kong have lost US$606 billion in market value over the past six months, crumbling under the weight of Beijing’s regulatory crackdown, earnings misses and concerns about delisting from US stock exchanges.

Risk appetite recovered this week after China’s central bank announced a second cut in the reserve requirement ratio this year, injecting 1.2 trillion yuan (US$188 billion) into the system starting December 15. Traders are also tuning in to China’s annual Central Economic Work Conference this month for more signs of policy easing aimed at stemming a decline in growth and propping up the property sector.

“I’m keeping a close eye on the upcoming Politburo meeting and the Central Economic Work Conference, which could offer more guidance on policy outlook,” said David Chao, a Hong Kong-based strategist at Invesco. “With this [RRR] cut, China’s macro backdrop appears to be slowly improving.”

Not every RRR cut has generated the same level of optimism. China has now lowered the reserve ratio 11 times since April 2018, adding a cumulative 8.2 trillion yuan of liquidity, according to central bank data. The Hang Seng Index rose on seven of those occasions. HSBC Jintrust, however, expects a muted impact from this month’s cut.

Weibo, the Chinese equivalent of Twitter, tumbled 6.8 per cent on its first day of trading in Hong Kong, a sign that demand for new shares was still weak after a flurry of headwinds that has roiled Asia’s third-largest stock market this year.

Jiangsu Zeyu Intelligent Electric Power jumped 38 per cent on its first day of trading in Shenzhen.

Other major markets in Asia advanced, taking cues from the strength in US stocks overnight. Major gauges of US equities rose by at least 1.4 per cent, as concerns receded that the omicron virus strain will derail recovery efforts.

Author: Zhang Shidong, SCMP

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