Alibaba and U.S.-listed Chinese stocks join Ant Capital Plan Nod

(Bloomberg) – Alibaba Group Holding Ltd. led a rise in U.S.-listed Chinese stocks on Wednesday as Ant Group Co.’s approved fundraising plan bolstered optimism that China’s regulatory crackdown on its internet sector is easing.

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Alibaba, which owns a stake in Ant, rose 13% in its biggest one-day gain since June, while its trading volume jumped to around 200% of the three-month average. Its e-commerce peers JD.com Inc. and Pinduoduo Inc. also traded up 15% and 7.7% respectively.

Up 8.6% on the day, the Nasdaq Golden Dragon index jumped 13% in the first trading sessions of 2023, the best start to the year on record, according to data compiled by Bloomberg dating back to 2001 The rally came amid bets that China’s reopening will eventually boost the economy and corporate earnings despite initial disruptions.

Regulators have approved a plan by Jack Ma’s Ant to raise 10.5 billion yuan ($1.5 billion) for its consumer unit, removing a hurdle before the fintech giant relaunches its suspended initial public offering in 2020. The news highlighted warmer ties between Chinese authorities and the country. the biggest tech companies, as officials have made economic growth a top priority.

“China has gone from being the problem child last year that no one wanted to invest in to what we call ‘moving on.’ economy,” said Nuno Fernandes, portfolio manager at GW&K Investment Management, who saw the Ant news as a “big surprise” to most institutional investors. “Many investors are finding themselves shocked or super underwhelmed. weighted to Chinese equities, and to correct that in the face of very rapid change.”

Adding to the optimism is potential additional policy support for the housing sector, a key weak spot in China’s Covid-hit economy. Beijing plans to help shore up the balance sheets of some developers it considers “systemically important”, according to a Bloomberg report. Authorities have also resumed approvals of private equity funds to raise funds for residential property developments.

With Wednesday’s advance, the Hang Seng China Enterprises Index, a gauge that tracks major Chinese stocks listed in Hong Kong, closed at its highest level since July. A resumption of mobility in some major cities has raised hopes that the number of Covid cases may have peaked, after the highly infectious virus pushed the country’s economic activity to the slowest pace since February 2020.

(Updates prices, adds chart and comment in fifth paragraph.)

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