Chinese tech stocks listed in Hong Kong rallied after authorities signaled an end to a years-long crackdown on the sector by imposing fines on Ant Group Co. and Tencent Holdings Ltd.
(Bloomberg) — Chinese tech stocks listed in Hong Kong rallied after authorities signaled an end to a years-long crackdown on the sector by imposing fines on Ant Group Co. and Tencent Holdings Ltd.
The Hang Seng Tech Index closed 1.1% higher, the biggest gain in a week. Alibaba Group Holding Ltd., parent of fintech giant Ant Group, led the advance, surging 3.2%. Tencent pared earlier gains to close up 0.7%.
The rally came after regulators imposed more than $1 billion in fines on the two tech behemoths, a move widely interpreted as bringing closure to a regulatory assault that had wiped out billions in market value. The gains also were part of a broader rebound in Chinese shares after Treasury Secretary Janet Yellen’s trip to Beijing this month fueled optimism bilateral ties will improve.
“The penalty is a positive development not only for Alibaba but the entire Internet space,” JPMorgan Chase & Co. analysts including Alex Yao wrote in a note. The fines indicate that the rectification of large fintech platforms has come to an end and marks “a beginning of normalized regulatory environment,” they said.
Ant Group’s proposal to buy back as much as 7.6% of its shares also improved investor sentiment. JPMorgan’s Yao said the new regulatory climate will likely lead to Ant reviving its shelved initial public offering in the next 12-to-18 months.
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