Chinese tech shares rebound after earnings defy crackdown


Chinese equities updates

Chinese technology stocks rebounded as a strong set of quarterly earnings from ecommerce group helped ease investor concerns over Beijing’s regulatory assault on the sector.

Shares in jumped 14.9 per cent in Hong Kong on Tuesday after the company revealed strong revenue and user growth in the second quarter. Separately, Cathie Wood’s Ark Investment Management disclosed that it had bought the ecommerce company’s stock following the earnings release.

Stocks of other Chinese companies that have weathered a blitz of regulations also rose, with the Hang Seng Tech index closing up 7.1 per cent. Internet groups Tencent and Alibaba gained 8.8 and 9.5 per cent, respectively, while food delivery business Meituan was up more than 13 per cent.

Tuesday marked the second day of strong buying for Chinese tech stocks, which have shed billions of dollars in value in recent weeks after Beijing clamped down on parts of the market ranging from education to gaming.

“For the first time in months, I had a heavy tilt to global, longer-term investors coming to buy,” Andy Maynard, a trader at investment bank China Renaissance, said of clients buying Chinese tech shares on Tuesday. “In Meituan alone, I had pretty much every client we have buying today.” said that its second-quarter revenue grew more than 26 per cent year on year to Rmb253.8bn ($39.2bn), beating analyst estimates. The company also added a record 32m users in the period, taking its total user base to more than 531m. Its user headcount grew 27.4 per cent year on year.

“We believe that the regulatory goals are conducive to JD’s long-term business growth. So far, our business maintains steady growth whilst committing to better compliance policies,” said JD Retail chief executive Xu Lei on a call with analysts.

Ark, which had been rapidly offloading Chinese tech stocks including following Beijing’s clampdown, disclosed that it had repurchased 164,889 shares in the ecommerce group.’s shares had fallen more than 36 per cent since a high in February.

Alibaba’s stock is down almost 40 per cent this year and the group was fined a record $2.8bn in April for anti-competitive behaviour. Chinese regulators in November scrapped the proposed $37bn initial public offering of its fintech affiliate Ant Group, and have imposed rounds of rectification measures in the months since.’s net income plunged to just under Rmb750m, down from 16.4bn a year ago, which the company attributed to higher marketing spend.

Executives at claimed that new regulations, such as a ban on forcing vendors to sell their products on only one platform, had actually helped the ecommerce group, spurring an influx of new vendors to its platform.

“We believe these policies are not intended to restrict . . . the internet and relevant industries”, said Xu, “but rather to create a fair and orderly environment and to promote long-term and sustainable development of these industries”.

Chucheng Feng, founding partner at political research group Plenum, said that the Chinese government’s announcement last week of a “common prosperity campaign”, which called on enterprises to give more back to society, had offered clarity to the country’s tech giants.

“Beijing clearly doesn’t want to kill the tech sector, it is one of the only sectors where China has a leadership role,” Feng said. “After two decades of this, Beijing wants them to basically do something for the government.”

#techAsia weekly newsletter

Your crucial guide to the billions being made and lost in the world of Asia Tech. A curated menu of exclusive news, crisp analysis, smart data and the latest tech buzz from the FT and Nikkei

Sign up here with one click