Chinese tech shares advanced as Beijing’s renewed pledge to step up growth lured back some buyers after weeks of intense selling.
The Hang Seng Tech Index closed up 2.9 percent yesterday, rebounding from the lowest in more than a month.
A rally in other equity gauges across China and Hong Kong lost steam during the day as traders remained cautious over whether the vows would bear fruit.
Yesterday’s market fluctuations came after fresh policy promises to boost consumption and end a regulatory crackdown on major tech companies as soon as possible.
Traders are uncertain about the sustainability of a rebound as COVID-19 lockdowns, dimming growth outlook and regulatory risks on the tech sector present headwinds.
“When consumption is falling off a cliff in some cities, the government needs to be seen doing something,” MegaTrust Investment (世誠投資) chief executive officer Qi Wang (王崎) said.
However, “today the problem is not just sentiment, but fundamentals — namely the impact of China’s zero COVID policy on the economy,” Qi said.
China’s benchmark CSI 300 erased early gains to fall 0.8 percent, extending Monday’s near 5 percent slump.
The Hang Seng Index closed 0.3 percent higher.
Traders say they want to see concrete actions after the latest statements from the Chinese State Council and the People’s Bank of China.
A rally in the middle of last month from a sweeping set of policy vows had nearly evaporated due to a lack of follow-through.
China’s adherence to “zero COVID-19,” the main market drag, is also showing little signs of easing.
Beijing started mass testing millions of its residents as part of an unprecedented scheme, raising fears about a potential wider lockdown that could crimp growth and earnings.
The Hang Seng Tech Index had been particularly hit hard recently as the US Federal Reserve’s tightening hurt rate-sensitive growth shares.
The rebound yesterday came after Bloomberg data showed that the gauge’s relative strength index fell near 30 in the previous session, a level which indicates a security is oversold.
“The stock rebound is more likely due to technical rebound, after shares were heavily oversold,” UOB Kay Hian Ltd (大華繼顯控股) executive director Steven Leung (梁偉源) said. “Any rebound should be limited unless the US bond yield falls further.”
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