(Bloomberg) — Chinese tech stocks advanced following a report that regulators are wrapping up an investigation into Didi Global Inc. with a hefty fine, with traders again hoping this will herald an end to a crackdown on the sector.
The Hang Seng Tech Index gained 1.6% on Wednesday, with Meituan and NetEase Inc. contributing the most to the rise. The move also tracks the advance in US tech stocks overnight after Netflix Inc. reported better-than-feared earnings.
Chinese tech shares have been on a roller-coaster ride in recent months, with optimism that authorities are taking a softer regulatory stance being challenged by news on fresh scrutiny over Alibaba and Tencent Holdings Ltd. While investors are initially cheering over the report that Didi probe is winding down with a more than $1 billion fine, caution remains high as regulatory uncertainties linger.
READ: Traders to Cheer Report Saying Didi Probe Over: Street Wrap
“This $1 billion amount is not too high for Didi, and signals an end of this investigation,” said Steven Leung, executive director at Uob Kay Hian (Hong Kong) Ltd. If the fine is followed up with an addition of new users to Didi’s platform and an initial public offering in Hong Kong, it will be one more step toward the end of the regulatory risks on the tech sector, he added.
The Hang Seng Tech Index remains down 6% this month, threatening to erase a rally in June that was spurred by broader optimism over China’s supportive macro policy stance.
The sector was hurt following a bevy of negative news including the antitrust watchdog’s fines on companies including Alibaba and Tencent, as well as a report that Alibaba’s executives are being questioned in connection with a data theft.
The benchmark Hang Seng Index also gained 1.1% on Wednesday. On the mainland, the CSI 300 Index closed 0.3% higher.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
