US-listed shares of Chinese tech giant Alibaba Group (NYSE:BABA) Holding Limited closed out Wednesday about 13% higher on optimism that the Chinese government’s crackdown on the internet sector has ended.
TickMill Group market analyst James Harte noted that the lift in bullish sentiment was in reaction to the news that Chinese regulators have approved a request by Ant Group, an affiliate company of Alibaba, to increase the registered capital for the company’s consumer section to 18.5 billion yuan (about US$2.7 billion).
“Alibaba CEO Jack Ma had fallen foul of the government, leading to much stricter business conditions for the group which drove stock prices lower into the pandemic,” Harte said.
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“However, this latest news suggests a better relationship between the two, a major boost for Chinese stocks and the tech sector broadly.”
Other Chinese US-listed stocks were lifted by the news, with Baidu Inc adding 10.6%, NIO Inc (NYSE:NIO), 10.4%, and Pinduoduo Inc (NASDAQ:PDD) 7.7% at the close on Wednesday.
Harte noted that Chinese US-listed stocks had seen their strongest start to the year on record as a result of the move in Alibaba this week.
“Indeed, Chinese stocks, on the whole, are rallying with the Shanghai Composite seeing straight gains this week despite the worrying news around the escalating Covid crisis in China,” he said.
“For now, at least, it seems that positive news elsewhere is helping offset bearish sentiment.”
As the three major US indexes turned red in pre-market trading on Thursday, Alibaba shares were down about 2.1%, trading at US$101.71.
Contact the author at emily.jarvie@proactiveinvestors.com
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