(Bloomberg) — Chinese tech stocks rallied by the most in three weeks, tracking its U.S. peers overnight, as buyers returned to the battered sector following recent declines.
Hong Kong’s Hang Seng Tech Index jumped as much as 4%, poised to snap two days of losses. Bilibili Inc. and Hua Hong Semiconductor Ltd. led the gains, each rising at least 8.3%. The broader Hang Seng Index advanced 1.9%. An unwinding of short bets also fueled gains.
Investors are starting to wade back into tech after Beijing’s regulatory onslaught sent the gauge tumbling over 40% from a February high. Growing consensus that the worst of the clampdown is behind coupled with the possible easing of U.S.-Sino trade tensions are also emboldening traders.
“The divergence in performance between U.S. and China tech since the start of the year seems to draw some markets’ attention on some opportunities for catch-up growth in Chinese tech,” said Jun Rong Yeap, a strategist at IG Asia Pte.
Read more: How China’s Big Tech Crackdown Unfolded Over a Year
The Communist Party is scheduled to hold its first convention in more than a year next week, a key event where leaders will clarify a number of policy stances. Traders will be keenly watching for any clues as to whether there might be further regulatory pressures ahead for private industry, said Daniel So, strategist at CMB International Securities.
Improved sentiment in the market also came after Reuters reported that Treasury Secretary Janet Yellen said the U.S. may eventually lower tariffs on Chinese goods in a reciprocal way, comments that were picked up by local media late Monday.
Meanwhile, short sell volume accounted for about one-third of total turnover in Hong Kong as of Tuesday morning, according to data from the city’s exchange, as traders rushed to unwind positions.
(Updates throughout)
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