Chinese technology shares leapt on Friday after the country’s largest internet groups beat first-quarter earnings estimates despite the damage caused by Beijing’s zero-Covid policy and widespread lockdowns in the world’s second-biggest economy.
Hong Kong-listed shares of Alibaba surged more than 12 per cent after the ecommerce group reported revenues had risen 9 per cent year on year in the first three months of 2022 to Rmb204bn ($30bn). The stock rose a day after Alibaba’s New York-listed shares soared more than 14 per cent to close at $94.48, despite the company warning that logistics and supply chain disruptions caused by the lockdowns would hit income.
The robust performance bolstered sentiment across the sector, which has been subjected to a punishing regulatory crackdown over the past 12 months.
Hong Kong’s Hang Seng Tech index was up 3.9 per cent by early afternoon on Friday, with all 30 of the companies listed on the benchmark rising.
Shares in Chinese search engine group Baidu soared 15.5 per cent in Hong Kong after the company reported sales had increased 1 per cent, led by its cloud and artificial intelligence business. The stock price of ecommerce company JD.com also jumped 5.8 per cent after the company reported an 18 per cent rise in quarterly revenues.
The strong tech sector results follow a series of warnings from Chinese policymakers about the health of the economy, with Premier Li Keqiang saying this week that conditions were “to some degree worse than” they were at the start of the coronavirus pandemic in 2020. The comments reflected the difficulties Beijing faces to reach its annual growth target of 5.5 per cent and Li called on officials to help companies resume production.
Analysts at Nomura said Alibaba’s ecommerce revenue would probably decline in April, a month after Shanghai was put into full lockdown. But they added that “there has been some recovery in business conditions with the easing of lockdown in Shanghai”.
Across the region, equities were broadly higher. The Hang Seng index was up 3.2 per cent, China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks and Australia’s S&P/ASX 200 were both 0.8 per cent higher and Japan’s benchmark Topix rose 0.4 per cent.
The advances followed a rally in US stocks after strong earnings from retailers Macy’s and Dollar Tree. The S&P 500 ended the day 2 per cent higher while the tech-heavy Nasdaq Composite rose 2.7 per cent, the biggest gains for both indices in a week.
European futures were marginally higher with the Euro Stoxx 50 up 0.1 per cent.