(Bloomberg) — Chinese tech stocks rose Monday after making their best weekly progress since January, as bargain hunters continued to revive the downturned sector.
The Hang Seng Tech Index rose a whopping 1.5%, led by live streaming giant Kuaishou Technology and Ping An Healthcare and Technology Co. Meituan, a food delivery company, has fluctuated between profits and losses for its results later on. Analysts expect second-quarter revenue to rise and the net loss to continue.
The rally comes despite a barrage of headlines of new rules for the tech sector, including a campaign to crack down on social media accounts misinterpreting domestic financial topics and the proposal for a credit rating system to regulate live streaming companies. Beijing has expanded its approach to the private sector to include corporate tutoring and online gaming in an effort to narrow the wealth gap.
“We may have seen the market bottom in the near term, after months of selling out,” said Castor Pang, chief of research at Core Pacific Yamaichi International HK Ltd. “While investors are still very sensitive to negative regulation, stocks managed to bounce back recently despite the occasional negative news.”
Mainland investors remained net sellers of Hong Kong stocks for the fourth consecutive trading session. They have unloaded HK$3.6 billion ($462 million) worth of shares as of 1:19 p.m. in Hong Kong through the trade ties with Shenzhen and Shanghai. The Hang Seng index rose 0.2%, while the CSI 300 index fell 0.5%.
Among the losers, entertainment and medical beauty stocks remained hammered Monday. Analysts at Citigroup Inc. said China’s new guidelines for regulating the fan-based economy could have a negative financial impact on the sector in the short term. Meanwhile, China is trying to correct illegal advertising in the cosmetic surgery industry.
Stocks also fell after the securities regulator urged companies to step up oversight of their margin financing activities, said a person familiar with the matter. CSI Financials’ sub-meter fell by a whopping 2.5%, with Orient Securities Co. Ltd. and GF Securities Co. Ltd. both collapsed with their daily limit of 10%.
In the US, an onslaught of frenzied buying from bargain-hunting retailers helped the Nasdaq Golden Dragon China Index – which tracks 98 US-listed companies – gain more than 9% last week, breaking an eight-week losing streak. Still, the meter’s performance faded towards the end of the week and investors on Friday were shocked by a report on China’s plans to ban US IPOs for data-intensive tech companies.
“Like all regulatory reforms, their end will not be announced and will only be visible in the rearview mirror,” said Justin Tang, head of Asian research at United First Partners in Singapore.
(Updates with falling stocks.)
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