Chinese stocks in the US surge after promise of state support

Bloomberg

Chinese stocks listed on US exchanges soared, rebounding from a steep selloff, after China vowed to keep its stock market stable and support overseas share listings.
Alibaba Group Holding Ltd. and Baidu Inc. both soared at least 20% in US premarket trading, while Didi Global Inc. jumped more than 40%. The American depository receipts (ADRs) are tracking a rally in Asian stocks after China’s announcement, with the Hang Seng Tech Index surging 22%, the most since on record.
China also said it’s keeping a good dialog with US regulators over ADRs, the official Xinhua news agency reported on Wednesday, citing a meeting of the State Council’s financial stability and development committee.
Chinese stocks in the US saw renewed weakness last week after the US Securities and Exchange Commission identified five Chinese companies that could be subject to delisting, adding to a growing list of regulatory concerns. The prospect of sanctions for China amid Beijing’s relationship with Russia and a lockdown in tech hub Shenzhen have also weighed on sentiment.
Investors have been split on the fate of Chinese stocks after the rout. While analysts at JPMorgan Chase & Co. said that some Chinese Internet names have turned “uninvestable” in the short term, others said the selloff was overdone.
“There were plenty of encouraging messages, but markets will be looking for action such as rate cuts, more fiscal spending, and easing regulations, to follow words otherwise the selling pressure may resume,” Mitul Kotecha, chief emerging Asia and Europe strategist at TD Securities, said.
For Marvin Chen, a strategist at Bloomberg Intelligence,
actions will also speak louder than words.
“We do have a solid base for a U-shaped recovery, supported by the policy shift and valuations,” he said. “For a next leg, we need to see policy makers follow through on easing measures and supporting growth going forward.”
The Stoxx Europe 600 index jumped more than 2%, with technology shares leading the advance as Prosus NV soared as much as 20%, rebounding from a record low. Contracts on the tech-heavy Nasdaq 100 climbed more than 1.5% while those on the S&P 500 crested as much as 1%.
An Asia-Pacific share gauge advanced the most since 2020, a measure tracking mainland companies listed in Hong Kong posted the biggest gain since the global financial crisis and a Chinese tech index added a record 20%.
China vowed policies to boost financial markets and spur economic growth as it attempted to ease fears over challenges related to the ailing property sector, overseas listings and a clampdown on internet firms. Equities in China and Hong Kong had been under pressure — shedding about $1.5 trillion over the first two days this week — in part on speculation that Beijing’s ties with Russia raise the risk of a US backlash.