China tech shares surge in final session after a painful year

Shares of China’s tech companies jumped on the last trading day of the year after a big Wall Street gain for US-listed Chinese businesses, although the rally wasn’t enough to shake off the post-2021 gloom for the sector marked by a regulatory crackdown.

Hong Kong’s Hang Seng index rose 1.2% on Friday, while the exchange’s technology index gained nearly 4%. China’s CSI 300 for shares listed in Shanghai and Shenzhen rose 0.4%.

The rally followed gains for China’s Nasdaq Golden Dragon index of large and mid-cap companies, which rose 9.4% on Thursday, its best single-day performance in more than a decade. The increase was driven by double-digit profits at companies including internet conglomerate Tencent, search engine Baidu, video-sharing platform Bilibili and New Oriental Education.

The Golden Dragon Index has dropped 42% in 2021, as Xi Jinping’s Campaign to rein in the country’s tech leaders and the threat of forced to postpone from the U.S. capital markets took their toll.

Friday’s gains in Asia were also driven by some of China’s biggest tech companies, with e-commerce giant Alibaba up 8% in trading in Hong Kong and rival about 5% increase. NetEase, the game company, was up about 4% while food delivery group Meituan was up 3.2%.

Dickie Wong, head of research at Kingston Securities, said the tests of the past year have been priced in and the market’s “psychology is turning back” towards the Chinese tech sector. “Internet and technology-related stocks are currently trading at extremely low valuations,” he said. “It’s time to recover.”

The market’s excitement came as China reported a slight increase in manufacturing activity in December despite a downturn in the real estate sector, troubled energy supplies and coronavirus outbreak.

The official purchasing managers index rose to 50.3, up from 50.1 in November, according to the National Bureau of Statistics, despite analysts’ expectations for a reading below 50, this could indicate a decline.

Friday’s rally wasn’t enough to erase Hang Seng’s 2021 losses. The broader index is down 14% in 2021, and the Hang Seng Tech index has lost 48% since its peak in February.

Alibaba stock price, fined record $2.8 billion antitrust violations in April have almost halved in Hong Kong year-to-date, while Meituan fell by more than a fifth, was down by almost one-fifth and Tencent was down more than 17%.

Elsewhere, European stock markets fell slightly in morning trade as trading fell for the year. The Stoxx 600 index was in the open flat, while Britain’s FTSE 100 was down 0.3%. The German Xetra Dax has been shut down.

Yields on the standard 10-year US Treasury note were unchanged at around 1.52%, with trading expected to be light throughout the day after the Securities Industry and Financial Markets Association recommended Suggest to close the market early for the holiday.

Brent crude, the international oil benchmark, fell 0.1% to $79.4 a barrel.

Additional reporting by Naomi Rovnick in London

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