China Tech Shares Stage Rebound After Five-Week Selloff
(Bloomberg) -- Chinese technology stocks rallied in Hong Kong on Monday as bargain hunters pounced in the wake of the sector’s worst rout in months.
The Hang Seng Tech Index closed 2.1% higher, following a near 11% slump last week that sent the gauge to the lowest level since its July 2020 inception on Friday. The index had dropped for five straight weeks, its longest losing streak since January 2019.
The benchmark, which tracks the biggest technology stocks in China, has lost nearly 45% since a February peak with Beijing’s crackdown on private sectors in recent months accelerating a selloff. It plunged into so-called oversold territory last week, triggering a round of buying. The Hang Seng Index gained 1.1%.
“After another week of heavy selling, some rebound can be expected as much of the tech sector is beginning to look like value plays,” said Marvin Chen, an analyst at Bloomberg Intelligence. Volatility in the sector may ease, although there is still “quite a lot of uncertainty” in how the long-term reforms may affect the sector’s growth profile, he added.
Online health-care firms recovered after state media’s warning over safety of prescription drug sales on Friday sent shares tumbling. JD Health International Inc. rose 10% while Alibaba Health Information Technology Ltd. gained 6.1%. The technology sector’s bellwether Tencent Holdings Ltd. climbed 2%, the most in nearly two weeks.
Alibaba Group Holding Ltd. remained oversold, dropping 3.7% to another record low in Hong Kong after China’s anti-graft watchdog announced an investigation into the top government official in the company’s home city. Video streaming giant Kuaishou Technology rose 2.6% but is still trading in oversold territory ahead of its earnings report on Wednesday.
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