Hong Kong stocks experienced a significant rally, with Alibaba Group and Tencent Holdings leading the surge, as traders speculated that the recent billion-dollar fines imposed on the companies would mark the end of China’s tech sector crackdown. The Hang Seng Index saw a 1.6% increase to 18,659.20, rebounding from a five-week low. The Tech Index also rose by 2.2%, while the Shanghai Composite Index climbed 0.4%.
Alibaba Group’s stock soared by 4.9% to HK$88.45, following an 8% rally in New York trading on Friday, marking its largest gain since March. Tencent also experienced a 2.4% increase to HK$334.60. Other tech peers, such as Meituan and Baidu, also saw gains of 2.6% and 1.5% respectively.
These positive market movements were driven by the recent penalties imposed by the People’s Bank of China on Ant Group, an affiliate of Alibaba Group Holding. The central bank fined Ant Group 7.12 billion yuan (US$984.3 million), Alipay 3.09 billion yuan, and Tenpay 2.99 billion yuan. Analysts viewed these fines as a signal that the government’s crackdown on unfair market practices within the tech sector was finally coming to an end.
In addition to the tech sector rally, Hong Kong developers also experienced gains as measures were introduced to ease mortgage financing limits for first-time house buyers. Sun Hung Kai Properties saw a 0.5% increase to HK$95.60, while Henderson Land and CK Asset climbed 1.5% and 1% respectively. These relaxing measures, the first of their kind since 2009, have brightened the outlook for home sales in the city.
However, the positive market movements were somewhat limited by a report revealing that deflation had deepened in mainland China. The statistics bureau announced that consumer prices in China remained stagnant in June compared to the previous year, after a 0.2% gain in May. Producer prices also shrank by 5.4%, adding to a 4.6% decline from May.
Across other Asian markets, the Nikkei 225 in Japan saw a marginal 0.1% decrease, while the Kospi in South Korea experienced a 0.3% gain and the S&P/ASX 200 in Australia added 0.3%.
In summary, Hong Kong stocks rallied, driven by the surge in Alibaba Group and Tencent Holdings, as traders anticipated the end of China’s tech sector crackdown. The positive market movements were also supported by measures aimed at stimulating demand from first-time house buyers in the city. However, the deepening deflation in mainland China tempered the overall gains.
