Alibaba, Baidu, Tencent drive relief rally in China tech stocks as strong report cards calm nerves on earnings outlook
- Alibaba and Baidu’s earnings reports came as a relief to investors worried about pandemic-hit earnings in China’s stop-start economy
- Chinese firms generated 2 per cent growth in March quarter earnings, according to Goldman Sachs, trailing the 9 per cent forecast for MSCI China members
The Hang Seng Tech Index rallied 3.8 per cent at the close of Friday trading, the most in a week. The advance fuelled the main Hang Seng Index to a 2.9 per cent gain, while the benchmark index in Shanghai rose 0.2 per cent. Today’s rally trimmed index losses in Hong Kong for the week to 0.1 per cent.
Baidu rose 14.3 per cent to HK$132.20. The search engine operator’s revenue rose 1 per cent to 28.4 billion yuan in the quarter to March 31, just ahead of the market prediction of a 0.8 per cent gain.
“Chinese tech stocks are exploring the ground floor until the growth story gets clearer,” said Wang Shenshen, a China equity strategist at Mizuho Securities. “Measures to help the Chinese economy are likely to provide some support for the tech stocks as well.”
Both sets of results came as a relief to investors who have been worried about corporate earnings as China’s zero-Covid policy leaves the economy in a stop-start fashion, upsetting production activity and clouding earnings outlook. More than US$400 billion of market value has been erased from Hang Seng Tech Index members this year as the gauge slumped 26 per cent this year, according to Bloomberg data.
