BEIJING: China said on Friday it would ease its crackdown on the once freewheeling tech sector, as Chinese President Xi Jinping sought to boost the economy in the face of slowing COVID-19 lockdowns, sending shares of online heavyweights surging.
China’s powerful Politburo, in a meeting chaired by Xi, said it will step up policy support for the world’s second-largest economy, including its so-called “platform economy”, fueling investor hopes that the worst may be over for an unprecedented, multi-pronged crackdown that began in late 2020.
The optimism was also powered by reports that China’s top leaders will hold a symposium early next month with a number of internet companies, expected to be chaired by Xi, according to two people familiar with the matter. Food delivery giant Meituan (3690.HK) was among those invited, one source said.
The sources declined to be named, citing confidentiality restrictions.
The South China Morning Post, which first reported on the meeting, said tech giants Alibaba Group Holding (9988.HK), Tencent Holdings (0700.HK) and TikTok owner ByteDance were also invited to attend.
A source told Reuters that authorities were seeking to reassure executives of the current regulatory environment and encourage them to continue growing their businesses.
The Hang Seng Tech index (.HSTECH) rose 10% for its best day since Vice Premier Liu He promised policy support six weeks ago. E-commerce giants Alibaba and JD.com (9618.HK) rose 16%, as did Meituan, while Tencent rose 11%.
Depository receipts of Alibaba, JD.com, Meituan and Tencent trading in U.S. markets were up 7.8%, 7.5%, 13.4% and 4.8% respectively on Friday afternoon.
“The Chinese government, much like the U.S. and other governments, has been trying to catch up in regulating a technology sector that has grown at an incredible rate over the past decade,” said Kevin Carter, CIO of EMQQ Global, which created the Emerging Market Internet & Ecommerce ETF (EMQQ.P), made up of around 50% China equity tech securities.
“This meeting may signal that the government feels they have caught up,” he said.
Jason Pride, chief investment officer at Private Wealth, said the market’s reaction suggested the Chinese government had taken steps to rein in what it believed to be the country’s largest internet company’s excess profits, but it was reducing pressure. at Glenmead.