Trading in China’s technology stocks has become so frantic that a single day’s turnover recently outstripped transactions in the entire Hong Kong market by more than four times.Tech bets have now overtaken the so-called reopening trade as the most popular punt after the latest economic data painted a mixed picture of China’s recovery from three years of Covid-19 restrictions.Traders have been pouring in to Kunlun Tech, Cloudwalk Group and other internet stocks listed on the Shanghai and Shenzhen exchanges in the past month to ride an artificial intelligence (AI) frenzy sparked by the launch of ChatGPT and Baidu’s ErnieBot.The buying spree has even spilled over to the three state-controlled phone operators, elevating China Mobile to the second-most valuable stock on the Shanghai bourse last month. A national digitalisation plan and the vast pool of user data in the phone carriers’ possession have reinforced expectations that the trio will become front runners in the foray into the AI business.
The heaviest trade occurred on March 24, when investors heaped some 480 billion yuan (US$69.7 billion) in to TMT (technology, media and telecoms) stocks to soak up 46 per cent of the day’s trade in China’s markets, according to Industrial Securities, a Chinese brokerage. The turnover of the tech stocks alone was more than four times the total in Hong Kong on that day.
Investors poured 8.1 trillion yuan into technology stocks in March, representing 38 per cent of transactions of yuan-traded shares for the month, according to the Securities Times, a newspaper operated by the People’s Daily.
Looser monetary policy and a lacklustre economy have prompted traders to shift to thematic investments from betting on stocks linked to the durability of economic growth over the past month.
“The market has reached a consensus that the economic recovery will be mild and policies will be relatively loose but without signs of massive stimulus,” said Zhang Qiyao, a strategist at Industrial Securities.
“That’s why the digital economy has become the main theme of the market. This scenario is likely to remain unchanged in the following two quarters.”
A US$38 billion rebound in Alibaba Group Holding in the last two weeks has added to the euphoria. The reappearance of founder Jack Ma, and a high-profile overhaul of the e-commerce giant’s business structure have reinforced a sense that the years-long regulatory crackdown on tech platforms has run its course and that Beijing will adopt a more pro-business approach to revive growth.
Alibaba is the owner of this newspaper.The momentum has strengthened this week after China’s internet regulator kicked off a security review of US memory chip maker Micron Technology...