(Bloomberg) — Chinese technology shares advanced on Monday after recording their best weekly gain since January as bargain hunters continued to load up on the beaten-down sector.
The Hang Seng Tech Index rallied as much as 1.5% Monday morning, led by live streaming giant Kuaishou Technology and Alibaba Group Holding Ltd. Food delivery company Meituan swung between gains and losses ahead of its results later. Analysts expect a jump in its second-quarter revenue and a net loss to continue.
The advance comes despite a barrage of headlines of new rules for the tech sector, including a campaign to crack down on social media accounts that misinterpret domestic financial topics and proposal of a credit rating system to regulate live streaming companies. Beijing has expanded its clampdown on private industry to tutoring companies and online gaming in a bit to reduce the wealth gap.
“Its like a plane flying in stormy weather, there will be pockets of calm amidst the volatility,” said Justin Tang, head of Asian research at United First Partners in Singapore. “Like all regulatory reforms before, the end of it will be unheralded and visible only in the rear view mirror.”
Mainland investors remained net sellers of Hong Kong stocks for a fourth consecutive trading session. They offloaded HK$868 million ($111 million) worth of shares via the trading links with Shenzhen and Shanghai as of 11:11 a.m. in Hong Kong. The Hang Seng Index was little changed, while the CSI 300 Index fell 0.4%.
Among the losers, entertainment and medical beauty stocks continued to be hammered on Monday. Citigroup Inc. analysts said China’s new guidelines on regulating the “fan-based economy” could mean negative financial impact on the sector in the near term. Meanwhile, China is seeking to rectify illicit advertising in the cosmetic surgery industry.
In the U.S., a bout of frenzied buying from bargain-hunting retail traders helped the Nasdaq Golden Dragon China Index – which tracks 98 firms listed in the U.S. – gain more than 9% last week, snapping an eight-week losing streak. Yet the gauge’s performance faded toward the end of week and investors on Friday were spooked by a report about China’s plans to ban U.S. IPOs for data-heavy tech firms.
(Adds losers section in second-last paragraph)
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