Xi’s blockchain push triggers frenzy in China tech stocks

Chinese President Xi Jinping and Brazilian President Jair Bolsonaro attend a welcoming ceremony at the Great Hall of the People in Beijing, China, October 25, 2019. REUTERS/Jason Lee

BEIJING: Chinese investors snapped up every blockchain-related stock in sight after President Xi Jinping said Beijing wants to speed up development of the technology.

The gains were widespread Monday, with Zhejiang Huamei Holding Co Ltd. and Julong Co Ltd. among more than 60 tech shares surging by the daily 10% limit in Shanghai and Shenzhen. The excitement coincided with a 30% rally in Bitcoin, and also boosted stocks with more tenuous connections to blockchain, like baby-food producer Beingmate Co. and selfie-app developer Meitu Inc.

Xi said China will increase investment in blockchain technology after chairing a study session last week on developing the industry, state-owned Xinhua reported late Friday. The market reaction shows how far an endorsement from Xi can go in China, where high-level officials on Monday began their first major policy meeting since early 2018.

"Most of these companies, especially those that are just beginning to state their connection with blockchain today, are trying to take advantage of the hype, ” said Li Shiyu, fund manager at Guangdong Xiaoyu Investment Management Co. "It shows how much excitement can be triggered by something stressed as a priority by the top man himself.”

The Shenzhen Information Technology Index jumped 5.1% Monday, its biggest advance in two months. Hundsun Technologies Inc., Easysight Supply Chain Management Co., YGSOFT Inc. and the dozens more companies with officially registered blockchain businesses rose by the limit.

In Hong Kong, traders singled out Meitu due to its plans for an encrypted user-identification system. The shares surged as much as 30%. Pantronics Holdings Ltd. -- which earlier this month said it will change its name to "Huobi Technology”, a reference to a digital currency exchange -- rallied as much as 67%. American depositary receipts of Chinese blockchain companies also surged Friday.

Investors also added pressure on other firms to jump on the blockchain hype, using an online Q&A platform to submit thousands of questions on their plans to use the technology.

"Please proactively make expansion plans in blockchain to jump on state policies -- doing so would be the best reward to investors, ” urged one shareholder of development-store operator Hunan Friendship & Apollo Commercial Co. - Bloomberg