The Hang Seng index made a bullish breakout above a key resistance level, helped by the rebounding tech stocks. HSI, the blue-chip Chinese index, rose to a high of H$21,682, which was its highest level since April 22 this year. It has risen by over 18% from its lowest level in May. At the same time, it has diverged from US indices like the Dow Jones and Nasdaq 100 that have retreated in the futures market.
Hong Kong tech recovers
The Hang Seng index has had a difficult period in the past few months as China has led a crackdown on technology companies. This crackdown has hit some of the most important companies in the country, like Tencent, JD.com, Alibaba, and Meituan. As a result, these firms have become shells of their former selves. For example, Alibaba’s market cap has dropped from an all-time high of over $600 billion to less than $300 billion.
Hang Seng is now rising after positive information from Chinese regulators. After investigating DiDi for months, the regulators have now given it the go-ahead to onboard new customers and continue running its operations as usual. The regulatory clarity is positive for tech companies in the Hang Seng index because it signals that the other firms could be safe as well.
The new regulatory clarity comes at a time when the Chinese economy is still struggling due to Covid-19 lockdowns. Tech companies led the HSI index rally on Tuesday. Alibaba Health shares rose by over 5.4%, while JD and Alibaba rose by over 4%. Other tech names like Lenovo Group, Tencent, and Meituan also rose.