Tech rally loses steam as Alibaba retreats while Twitter-like Weibo flops on Hong Kong trading debut

Chinese technology stocks failed to build on a rally amid concerns China’s liquidity injection will not be enough to arrest a slowdown in the economy. Weibo, China’s Twitter, slumped on its Hong Kong trading debut.

The Tech Index closed little changed on Wednesday after a 4.2 per cent rally a day earlier. The Hang Seng Index, which tracks sentiment on the broader market, rose less than 0.1 per cent to 23,996.87 after a 2.7 per cent surge on Tuesday. China’s Shanghai Composite Index added 1.2 per cent.

Alibaba Group Holding, which owns this newspaper, slid 4.7 per cent, paring some of its record 12 per cent rally on Tuesday. NetEase and Baidu each lost about 2 per cent while Meituan retreated 0.2 per cent. Short video-platform operator Bilibili gained 1.9 per cent while Tencent Holdings advanced 0.7 per cent.

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China will lower banks’ reserve-requirement ratio on December 15, injecting US$188 billion of liquidity into the system. It has cut the ratio 11 times since April 2018, adding a cumulative 8.2 trillion yuan, according to central bank data. It’s unlikely to be a game changer as slowdown risks abound, according to BCA Research.

“The RRR cut is within market expectations and the PBOC has refrained from expanding the base currency in recent years,” Shen Chao, a strategist at HSBC Jintrust Fund Management in Shanghai. “It does not represent a shift in monetary policy. We expect the impact to be neutral.”

Chinese technology juggernauts listed in Hong Kong have lost US$606 billion in market value over the past six months, crumbling under the weight of Beijing’s regulatory crackdown, earnings misses and concerns about delisting from US stock exchanges.

Risk appetite recovered this week after China’s central bank announced a second cut in the reserve requirement ratio this year, injecting 1.2 trillion yuan (US$188 billion) into the system starting December 15.

Traders are also tuning to China’s annual Central Economic Work Conference this month for more signs of policy easing aimed at stemming a decline in growth and propping up the property sector.

“I’m keeping a close eye on the upcoming Politburo meeting and the Central Economic Work Conference, which could offer more guidance on policy outlook,” said David Chao, a Hong Kong-based strategist at Invesco. “With this [RRR] cut, China’s macro backdrop appears to be slowly improving.”

Weibo, which operates a microblogging platform like Twitter, tumbled 7.2 per cent on its first day of trading in Hong Kong, a sign that demand for new shares was still weak after a flurry of headwinds that has roiled Asia’s third-largest stock market this year.

Jiangsu Zeyu Intelligent Electric Power jumped 33 per cent on its first day of trading in Shenzhen.

Other major markets in Asia advanced, taking cues from the strength in US stocks overnight. Major gauges of US equities rose by at least 1.4 per cent, as concerns receded that the omicron virus strain will derail recovery efforts.

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