(Bloomberg) — Earnings upgrades are adding to an improved outlook for China’s beaten-down technology stocks amid optimism that Beijing’s sweeping crackdown on the sector is finally beginning to ease.
The 12-month forward earnings estimate for companies on Hong Kong’s Hang Seng Tech Index, which carries bellwethers such as Tencent Holdings Ltd. and Alibaba Group Holding Ltd., has risen by about 4% from a low in May after dropping nearly 11% from a peak in March, according to data compiled by Bloomberg.
The turnaround is notable for the sector, which has seen trillions of dollars in market value globally wiped out in the wake of Beijing’s more than yearlong crackdown on private enterprises in pursuit of “common prosperity”.
A report that regulators are looking to end a probe on Didi Global Inc., which became the poster child of China’s regulatory wrath, and approvals of new video games show that policymakers are matching words with actions to support the sector.
The outlook is also improving amid a string of better-than-expected results by internet giants including Alibaba, Baidu Inc. and Meituan.
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