Chinese tech stocks surged after strong results from internet companies, including better-than-expected sales from e-commerce firm Alibaba despite an economic slowdown driven by Beijing’s Covid-19-related shutdowns.
The Hangzhou-based company beat analysts’ forecasts with its first-quarter sales and profit numbers despite a slowing economy, and it outperformed local rivals such as Tencent. Revenue rose 9% to 204bn yuan (£24bn) in the first three months of the year.
Shares of Hong Kong-listed Alibaba jumped nearly 12%, a day after its New York-listed shares soared more than 14% to close at $92.48.
Its resilient performance has bolstered confidence in the sector, which has been battered by a regulatory crackdown over the past year. Hong Kong’s Hang Seng Tech index of the 30 largest tech companies rose 3.6%, while the broader Hang Seng index climbed 2.8%.
Shares of Chinese search engine group Baidu rose nearly 15% in Hong Kong after reporting a 1% rise in sales, driven by its cloud and artificial intelligence businesses. Shares of JD.com, China’s largest online retailer, rose more than 5% after posting an 18% increase in quarterly revenue.
However, Alibaba also warned of the impact of restrictions on its business under Beijing’s zero-Covid policy, and declined to give guidance for the current year as coronavirus risks clouded the outlook. . He said the restrictions were affecting traders’ ability to ship goods and causing consumers to focus on buying basic necessities.
Daiwa Capital analysts said: “As Alibaba’s large scale reflects the overall macro economy, we believe it is the main beneficiary of a potential favorable policy rollout in terms of lockdown measures and consumer stimulus. .”
After two months of Covid shutdowns that squeezed consumer spending, Beijing announced measures to support the economy this week.
After strong gains on Wall Street, most Asian stock markets were up at the end of the week. China’s CSI 300 index of stocks listed in Shanghai and Shenzhen edged up 0.2%, while the Australian market rose more than 1%.
Richard Hunter, Head of Markets at Interactive Investor, said: “The wave of cautious optimism spread to Asian markets and consolidated after Alibaba’s revenue growth exceeded expectations, which boosted technology stocks. Additionally, the reported cooling in tensions between China and the United States and the likelihood of more stimulus from the former to support the local economy underpinned the positive moves.
The strong performance in the technology sector comes after a series of warnings from Chinese policymakers about the health of the economy. Prime Minister Li Keqiang said this week that conditions were “somewhat worse” than they were at the start of the coronavirus pandemic in 2020.