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Alibaba and stocks rally on hopes tech crackdown may be over

By Laura He, CNN Business

Shares in Chinese tech companies have surged this week on hopes that Beijing is close to ending a yearlong regulatory crackdown on the industry.

Alibaba was up 1.9% on Tuesday, following a 5% gain on Monday. climbed 3%, after rising 4.7% the previous day.

Other tech shares have also gained sharply since Monday. TikTok’s rival Kuaishou advanced 1.2% on Tuesday, adding to a 5.1% increase in the prior session. Food delivery service Meituan increased 0.5% on Tuesday and is up 10% so far this week.

The gains followed a strong session for Chinese stocks on Wall Street on Monday, when the Nasdaq Golden Dragon China Index soared 5.4%.

Didi was the top gainer in New York, jumping as much as 67%, after The Wall Street Journal reported that Beijing’s cybersecurity review of the ride-hailing giant was about to wrap up. The move would allow Didi to return to app stores in mainland China, potentially as soon as this week.

“The headline sparked speculation that Beijing was ending the crackdown on the platform economy to support growth given mounting downside pressure on China growth,” said Ken Cheung, chief Asian foreign exchange strategist for Mizuho Bank.

However, it would take time to repair business confidence, he added.

China’s economic outlook has deteriorated rapidly in recent months amid widespread Covid-related lockdowns. Consumer spending and factory output both shrank sharply in April, while unemployment surged to the highest level since the initial coronavirus outbreak in early 2020.

Concerned about the worsening outlook, Beijing has signaled that it will relax its yearlong crackdown on the tech sector — long a key growth driver and the main source of well-paid employment.

In recent weeks, top government officials have tried to lift the spirits of the internet industry and pledged to support tech companies that seek to list in overseas markets.

Authorities have also unveiled a new package of 33 stimulus measures to shore up growth post Covid, including tens of billions of dollars of additional tax cuts and infrastructure spending.

Key cities like Beijing and Shanghai have gradually reopened and lifted Covid restrictions, with daily life starting to return to normal.

Chinese equities are pricing in “the worst is over” as China reopens its economy, said Jeffrey Halley, senior market analyst for Oanda.

The benchmark Shanghai Composite edged up 0.2% on Tuesday, poised for a third straight day of gains. It rose 1.3% on Monday. The large-cap CSI 300 was up 0.4%, following a 1.9% advance on Monday.

Hong Kong’s benchmark Hang Seng Index, meanwhile, retreated slightly after rising 2.7% in the previous day.

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