China tech rally presses ahead as Xi's meeting spurs bets of policy shift (updated)

Gaotu Techedu

18/02/2025 13:22

(Repeats to widen distribution with no changes to headline and
text)
    By Jiaxing Li
       HONG KONG, Feb 18 (Reuters) - Chinese tech stocks
continued to rally on Tuesday on optimism that President Xi
Jinping's rare meeting with the country's tech entrepreneurs
foreshadowed a regulatory U-turn after years of a sector-wide
crackdown.
    The Hang Seng Tech Index  .HSTECH  climbed 2.5% to close at
a fresh three-year high and bring the gains for the past month
to over 30%. The overall Hang Seng Index  .HSI  jumped 1.6% to
its highest since early October.
    Index heavyweight Alibaba  9988.HK  surged 3.3% to a near
three-year high after state media CCTV showed Xi and Alibaba
founder Jack Ma shaking hands at the meeting on Monday.
    Tencent  0700.HK  jumped 2% to its highest since 2021 and
Xiaomi  1810.HK  rallied over 7% to a record high.
    Their executives were among the high-profile Chinese tech
leaders at the symposium which was considered a signal that
private enterprise could be treated kindly and that a crackdown
on tech giants is over.
    "We think the symposium marks an end to the crackdown,
potentially removing one of the longest-lasting overhangs on the
sector's performance," analysts at UBS Global Wealth Management
said in a note.
    Xi's support for innovation industries, ongoing macro policy
support and other fundamental improvements will be crucial
drivers of the Chinese tech sector's outperformance against the
broader market from here, they said.
    Wall Street banks such as Goldman Sachs, Citi and Bank of
America have changed their stance on China since the
DeepSeek-triggered tech rally, saying the bull case is getting
stronger for Chinese stocks due to the AI breakthrough and
Beijing's pro-business shift.
    On the day, however, the onshore markets closed lower as
investors booked profit after early-session gains. The blue-chip
CSI300  .CSI300  and the Shanghai Composite  .SSEC  indexes fell
0.9% each after hitting their 2025 highs earlier in the session.
    The CSI AI index  .CSI930713  slipped 2.5% to lead the
losses onshore, with top chip designer Cambricon Technologies
 688256.SS  tumbling 5%. The gauge is still up nearly 12% so far
this year.
    U.S.-listed shares of Chinese firms mirrored gains in their
domestic peers. 
    Shares of Alibaba  BABA.N , online brokerage firm UP Fintech
Holding  TIGR.O  and online education firm Gaotu Techedu
 GOTU.N  jumped between 3.2% and 5.5% in premarket trading.
    The iShares MSCI China ETF  MCHI.O  and iShares China
Large-Cap ETF  FXI.P  were up 1.5% each in premarket, while the
tech-focused KraneShares CSI China Internet ETF  KWEB.N  gained
1.6%. 

 (Reporting by Jiaxing Li in Hong Kong and Nikhil Sharma in
Bengaluru; Editing by Subhranshu Sahu, Savio D'Souza and Krishna
Chandra Eluri)
 ((jiaxing.li@thomsonreuters.com +852 63358304))