The Hang Seng China Technology Index, surges as Alibaba Group Holding Ltd. (NYSE:BABA) and Baidu Inc.’s earnings exceeded the market’s pessimistic projections. On Friday, Chinese internet stocks soared as a remarkable run for the industry continued. US depositary receipts for both firms were up more than 10% on Thursday when the rally got underway.
Consequently, the Nasdaq Golden Dragon China Index rose by 7.6 percent. Internet giants Google and Facebook were in Hong Kong on Friday, as well. There was a 3.8 percent rise in the Hang Seng Tech Index, while the Hang Seng Index rose by 2.9 percent in the first half of 2016.
Growth in its main e-commerce operation drove Alibaba’s first-quarter sales up 9% year-over-year to about $32 billion. Baidu’s cloud and artificial intelligence offerings have become more popular, resulting in a similar yearly revenue increase.
Baidu’s cloud and artificial intelligence technologies were the driving force behind those revenues, slightly beating analysts’ estimates. When compared to estimates that had been more negative over the previous weeks, Alibaba fared “better than anticipated,” said Sanford C. Bernstein analysts Robin Zhu and coworkers
According to Credit Suisse’s Greater China Chief Investment Officer, Jack Siu, the new findings have sparked a surge in Chinese IT companies. A halt in the regulatory assault against Internet firms and internet platforms has been signaled by Beijing, according to him.
According to Siu, Beijing is pushing for a more robust digital economy. We just discussed with a group of Chinese lawmakers who emphasized their support for the economy. At the Politburo meeting in April, the governing Communist Party committed to developing economic policies and measures to resolve problems with internet-platform firms.
As Asia equities strategy head Frank Benzimra put it, Chinese tech stocks have suffered an”extraordinary” degree of volatility. Covid-19 rules are stifling development and reducing consumer confidence in China, despite the country’s government’s growing support for the economy.
As a result, Mr. Benzimra said it was premature to claim that the IT industry had hit rock bottom. This must be the end of the road if we are to see any long-term economic development and spending, according to him.
Since its first public offering in New York in 2014, the growth rate of Alibaba’s sales has been at its slowest pace ever. Alibaba was unable to make a projection for the current fiscal year, which ends in March 2023, due to interruptions caused by Covid.
Alibaba still has a market capitalization of $250 billion, despite a 23% decline in its Hong Kong-listed shares this year. Achieved a market value of $850 billion in the autumn of 2020
A 9 percent year-to-date reduction has been achieved by Baidu as of late. In addition to Tencent Holdings Ltd. and Meituan, other IT giants, the Hang Seng Tech Index has fallen 26% so far this year.
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