Chinese Tech Stocks Jump After Tencent Gets Deal Approval
Comment of the Day

July 13 2021

Commentary by Eoin Treacy

Chinese Tech Stocks Jump After Tencent Gets Deal Approval

This article from Bloomberg may be of interest to subscribers. Here is a section:

The gauge of the city’s tech stocks had fallen as much as 10% this month after China vowed to increase scrutiny over data collection and overseas listings.

“Regulators are still considering each deal case by case and not rejecting all of them. The sentiment is not that negative now,” said Castor Pang, head of research at Core Pacific Yamaichi. “Any good news will trigger buying on dips in the sector.”

Elsewhere, internet giant Meituan rose 3.4% after Caijing reported Monday that the company re-launched a ride-hailing app after industry leader Didi Chuxing was barred from offering new downloads. Short-video streaming platform Kuaishou Technology jumped 5.7% and Alibaba Group Holding Ltd. gained 4%.

Eoin Treacy's view

Investors want to own Chinese tech shares because they believe they have the growth runway the USA’s tech behemoths had a few years ago. The temptation comes with a price attached because of China’s “rule by law” instead of “rule of law”. The tenor of regulation has the hallmark of being politically motivated but the trade is the Party may not be quite willing to kill the sector.

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