in Hong Kong and mainland China jumped for a second day after Beijing convened a meeting with bankers to calm fears over its regulatory actions in the technology and education sectors. The central bank separately injected more cash into the system.
The Hang Seng Index surged 3.3 per cent to 26,315.32 on Thursday, the biggest rally in more than a year. The rally followed a 1.5 per cent rebound on Wednesday to halt a three-day rout. The CSI 300 Index, which tracks China’s biggest onshore stocks
traded in Shanghai and Shenzhen, added 1.9 per cent while the tech-heavy ChiNext jumped 5.3 per cent for its biggest gain since February 2019.
Almost half of the 30-member Hang Seng Tech Index advanced by more than 10 per cent, powering the gauge up by record 8 per cent. Meituan rallied 9.3 per cent to HK$228 while Tencent Holdings soared 10 per cent to HK$491.80. Alibaba Group Holding, the owner of this newspaper, jumped 7.5 per cent to HK$196.90.
“If investors buy the new signals from Beijing, the market will continue to trend upwards,” said Louis Wong, director at Phillip Capital Management in Hong Kong. “Recent-issued regulations are still there and will have a long-term impact on the sectors.”
The virtual call late Wednesday
was led by China Securities Regulatory Commission Vice Chairman Fang Xinghai, Bloomberg reported, citing people familiar with the event. The latest crackdown on the education sector was targeted and not intended to hurt companies in other industries, the news report said.
China’s regulatory actions, whether against internet-platform operators or after-school education firms, are not an attempt to restrict or clamp down the related industries but for the long-term development of the economy and society, the official Xinhua News Agency said in a commentary late Wednesday. It also stressed that China will continue to allow companies to go public in offshore markets.
The meeting and media reports followed other articles published in state-run media
over the past two days as China sought to shore up fragile sentiment after its clampdown on off-campus tutoring last week triggered a slump that erased more than US$1.2 trillion from key benchmark stocks in local bourses.
Elsewhere, the People’s Bank of China injected 30 billion yuan (US$4.6 billion) into the financial system on Thursday through the seven-day reverse repurchase agreements ahead of a potential liquidity squeeze at month-end.
Traders remained worried about regulatory uncertainty, said Louis Tse Ming-kwong, managing director at Wealthy Securities. There’s still some jitters in the market as investors seek more comfort to invest for the medium to long term, he added.
Some large investors have already started to unload their shares. Cathie Wood’s flagship US$25.5 billion Ark Innovation ETF has cut almost all of its holdings of China stocks, according to its fund data, from a high of 8 per cent in February. The fund sold US$1.66 billion of its stakes in Huya, Baidu, Tencent and KE Holdings by the end of Wednesday.
Education stocks rebounded as analysts at UBS and Credit Suisse retained their bullish view on some operators. China Education Group and New Oriental Education and Technology. Both stocks rallied by 5.3 per cent and 10 per cent. respectively Peers including Scholar Education Group, Koolearn Technology and China New Higher Education Group soared by 10 to 19 per cent.
In the onshore markets, health care stocks rallied. Walvax Biotechnology surged 14.4 per cent and Shanghai Fosun Pharmaceutical rose 6.3 per cent. A
Markets in Asia-Pacific region also advanced with benchmarks in Australia and Japan rising by 0.3 to 0.7 per cent, while stocks in South Korea eked out a small gain.