Chinese Tech Stocks Soar as U.S. Measures Spur Support Hopes
(Bloomberg) -- Mainland-listed technology shares surged on Monday, driven by expectations of support from Beijing in response to U.S. moves on Chinese-owned software companies.
A gauge for Shanghai's Star board of tech startups closed 7.3% higher, a record gain and a fresh closing high. Shenzhen's ChiNext Index rose 2.6%.
The gains come amid signs that the U.S. will announce measures against Chinese-owned software deemed to pose national-security risks. President Donald Trump last week said he planned to ban TikTok, the popular music-video app owned by ByteDance Ltd., one of China's biggest tech companies.
Comments by U.S. Secretary of State Michael Pompeo suggest a possible widening of U.S. measures beyond the popular app. Microsoft Corp. was said to be exploring an acquisition of TikTok's operations in the U.S.
“Investors hold the belief that whatever sector the U.S. bans, China will step up support in that area to push for greater development at home,” said Zhang Gang, a strategist with Central China Securities Co. “Following the threat of the TikTok ban, there are growing expectations that more supportive policies could be rolled out to boost the technology sector, and that's lifting the related shares.”
Monday's gains followed a call last week by Chinese President Xi Jinping for a greater push on reforms to stimulate domestic demand. While in the short term leaders have expressed satisfaction that growth is recovering, China faces a host of shorter-term economic problems including the confrontation with the U.S that could pose bigger challenges.
Guangdong Advertising Group Co., which provides marketing services on ByteDance platforms including TikTok, surged by the 10% daily limit, while Shunya International Martech (Beijing) Co., whose wholly-owned unit handles TikTok ads for clients, also jumped 10% to a fresh all-time high. Suning.com Co., which cooperates with Douyin -- the Chinese equivalent of TikTok -- over supply chain and live broadcasting segments, added 8.1%.
©2020 Bloomberg L.P.
With assistance from Bloomberg
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