Chinese tech stocks rise in last trading session of 2021 after year of pain

Shares in China’s tech companies surged on the final trading day of the year, following big gains on Wall Street for US-listed Chinese businesses on Thursday, though the rally was not enough to shake off the gloom after a woeful 2021 for the sector marked by a regulatory crackdown.

Hong Kong’s Hang Seng index rose 1.2 per cent on Friday, while the exchange’s tech index climbed 3.6 per cent. China’s CSI 300 of Shanghai- and Shenzhen-listed stocks was up 0.4 per cent.

The rally followed a boost for the Nasdaq Golden Dragon index of large- and mid-cap Chinese companies, which jumped 9.4 per cent on Thursday, its best one-day performance in more than a decade. The rise was driven by double-digit gains for companies including search engine Baidu, video-sharing platform Bilibili and New Oriental Education.

However, those gains eased on Friday, with Baidu dipping over 1 per cent and ecommerce group Alibaba falling 3.4 per cent by the end of the trading day, contributing to a 1.1 per cent decline for the Golden Dragon index.

The earlier gains also stood in contrast to the index’s performance over the rest of the year. The Golden Dragon index has fallen nearly 49 per cent in 2021, as the campaign by Chinese president Xi Jinping to rein in the country’s tech leaders and the threat of forced delistings from US capital markets took their toll.

Friday’s gains in Asia were driven by some of China’s biggest tech companies, with Alibaba adding 8 per cent in Hong Kong trading and its rival JD.com advancing about 5 per cent. NetEase, the gaming company, rose just under 4 per cent while food delivery group Meituan added 3.2 per cent.

Dickie Wong, head of research at Kingston Securities, said the trials of the past year had already been priced in and that market “sentiment was coming back” to the Chinese tech sector. “Internet- and technology-related stocks are now trading at extremely low valuations,” he said. “It’s time for a rebound.”

The market enthusiasm came as China reported a slight uptick in manufacturing activity for December despite a property sector slowdown, energy supply woes and coronavirus outbreaks.

The official purchasing managers’ index rose to 50.3, up from 50.1 in November, according to the National Bureau of Statistics, defying analysts’ expectations of a reading of below 50, which would have indicated a contraction.

Friday’s rebound was not enough to erase the Hang Seng’s 2021 losses. The broader index is down 14 per cent in 2021 and the Hang Seng Tech index has lost 48 per cent since a February peak.

The share price of Alibaba, which was fined a record $2.8bn for antitrust violations in April, has almost halved in Hong Kong in 2021, while Meituan is down more than a fifth, and JD.com and Tencent have fallen almost a fifth.

Elsewhere, Wall Street skidded into the close, with the S&P 500 sharply dropping to a loss of 0.3 per cent for the day, having earlier recovered from opening losses.

Nonetheless, the index remains close to its all-time high. The dip followed a subdued session in Europe with the Stoxx 600 index inching lower and the UK’s FTSE 100 finishing a holiday-shortened trading day down 0.25 per cent.

The share price of Hunter Douglas, the Dutch manufacturer of window coverings and architectural products, soared 70 per cent after the FT reported on Thursday that 3G Capital had acquired a majority stake in the company, the first major transaction for the global investment group since 2015.

The yield on the benchmark 10-year US Treasury note was flat at 1.51 per cent, with trading expected to be light throughout the day after The Securities Industry and Financial Markets Association recommended an early market close for the holiday, in contrast to the stock markets’ full day of trading in the US.

Brent crude, the international oil benchmark, ended its best year since 2016 down 2.2 per cent for the day to $77.78 a barrel.

Additional reporting by Naomi Rovnick in London

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