(Bloomberg) – A potential meeting this week between President Xi Jinping and the Jack Ma electronic commerce icon, coming after a blister managed by technological actions, could be the next catalyst to extend the rally in Chinese actions.
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Eminent entrepreneurs, including MA, were invited to meet the main leaders of the country, said familiar people with the case last week. The potential show for support for the private sector coincides with the recent increase in actions in Hong Kong, carried out by increasing capacities of artificial intelligence.
The Hang Seng China Enterprises index extended the gains on Monday, after reaching its highest level since February 2022 last Friday. The gauge was up up to 1.7% before cutting off its advance. A technological gauge in Hong Kong entered an upward market earlier this month, fueled by the AI model of the Chinese startup Deepseek which changes the situation.
“Such a publicized approval sends a clear support message from the Chinese government, which considers the technological sector as a future engine of economic growth,” said Robert Lea, Bloomberg Intelligence analyst.
A main engine of the rally is Alibaba Group Holding Ltd., whose actions listed in Hong Kong have increased by around 60% since January 13. Tencent Holdings Ltd. The company said that it joined Deepseek’s artificial intelligence chatbot in WeChat. The stock is increasing almost 40% compared to a hollow in January.
Some investors say that the rally is overcrowded and stretched, but the support of Xi would be a strengthening of the confidence of the 16 billions of Chinese dollars and the stock markets of Hong Kong who have benefited from regular gains since mid-January.
“Recent developments correspond to our expectations of a short -term negotiation opportunity on the Chinese stock market, rather than reporting a structural change,” said Nenad Dinic, Stage in shares from Banque Julius Baer in Zurich. “Nevertheless, without new catalysts of income, liquidity or political signals, the risk of decline increases.”
A meeting involving XI and MA can be a central turning point for Alibaba since Beijing has increased the initial public offer of Ant Group Co. reinstall in the sector which had developed perhaps too large and powerful for comfort. It would also send a powerful signal that the Chinese Communist Party adopts a more favorable position for companies in the private sector.
Crystalline message
“Having Jack MA in particular would provide a symbolic end to the repression of the technological sector, which mainly started with him in 2020,” said Christopher Beddor, director of research in China of Givekal Dragonomics in Hong Kong. “In practice, repression has been over for some time now. But Xi’s optics said to MA and other technological leaders to go ahead and prosper would send a crystalline message that the government’s position was completely reversed. »»
China is well aware that innovation is the main engine of productivity growth. XI continuously pushed for “new productive forces” in the middle of the American borders on high -end fleas to China. It only did Beijing to redouble self -sufficiency efforts in advanced technology.
The evaluation of the technological index does not seem to be sparkling, since the Hang Seng Tech gauge is negotiated at 18.2 times the profits in the long term, against 44.9 times four years ago.
Meanwhile, the term contracts on the 30 -year bonds of China have dropped for a third consecutive day at the lowest since the end of January, due to shares and close liquidity on the money market. On the cash market, the yield at 10 years increased to 1.67%.
“Chinese actions are negotiated with extremely depressed assessments with most of the risks well discussed and reflected in prices,” said Sandy Pei, a main portfolio manager for Chinese actions at Federated Hermes. “The Deepseek event acted as a catalyst, stimulating feeling around Chinese actions. Despite recent performance, the market remains attractive. »»
Deepseek has actually stimulated the feeling of investors in the Chinese technology sector, and the rally has spread beyond technology in other sectors, including manufacturers of electric vehicles and health care companies. This is quite the opposite of what many Chinese investors have experienced in recent years, while waiting for the government to stimulate the stock market, whether by the deployment of revival or via negotiation purchases by ETF known for Be favored by the so-called “national team. “”
Goldman Sachs Group Inc. strategists have increased their goals for MSCI China and CSI 300, expecting two -digit gains from here. The development of AI of the country has “changed the account of Chinese technology, reassess the optimism of investors on growth and economic benefits of AI,” wrote Kinger Lau in a note dated on Monday.
– With the help of Lucille Liu, Henry Ren, Cecile Vannucci, Colum Murphy, John Cheng, Tian Chen and Jiyeun Lee.
(Updating market movements, adds Goldman’s comments in the final paragraph.)
