A number of boxes of goods purchased from JD.com are stacked on the ground. Zhang Peng | LightRocket | Getty Images
GUANGZHOU - China Hong Kong-listed Chinese tech stocks staged a massive rally Tuesday as investors gained more clarity about the regulatory outlook and purchased some names that had suffered a lot in recent months. Bullish sentiment was also boosted by positive earnings reports from Chinese tech giants. The Hang Seng Tech Index which tracks 30 of the largest technology companies listed in Hong Kong was up 6%. This outperformed the wider index, which rose 2%. Tencent shares rose 7%, Meituan, a food delivery company, was about 12% higher, and Alibaba's Hong Kong stock surged 7%. After beating market expectations, JD.com, the E-commerce giant, surged more than 13%. Ark Investment Management, Cathie Wood and Ark Investment Management purchased 164 889 American depository receipts from JD.com on Monday. The tech-oriented Hang Seng index fell more than 20% since its February peak. Although the benchmark has risen slightly since February, it is still 18% lower than its February peak. During this time, the technology companies of China have lost billions of dollars in value. China's stricter regulatory regime is the driving force behind this sell-off. China's tightening regulatory regime has prompted rapid adoption of new laws, which were followed by investigations and punishments by Chinese authorities.
Investors may see the sharp fall in share prices as an opportunity to buy shares. "We prefer to search for value. This is our overall view. According to Lorraine Tan, Morningstar's director of equity research Asia, "The markets in Asia aren't as frothy after the recent drops... (due) to the HK/China problems and this is probably where you would look." In an attempt to stop the monopoly of platform companies, regulators issued anti-monopoly rules earlier this year. The draft rules were published by regulators this month to prevent unfair competition in the internet industry. China's Personal Information Protection Law (PIPL), a major privacy law, was passed Friday. It will take effect in November. This follows two other important data policies. While the market may have gained some clarity from the slew, the pace of new legislation might be slower. According to Winston Ma, an adjunct professor of law at New York University School of Law, "The capital market feels that the release of PIPL... completes China's data governance system, such that Chinese regulators might finally take a pause 2021 from unabating regulation for the tech sector that was poorly regulated last decade,"
