August 18, 2022

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China Tech Stocks Rise as Gaming Approval Lifts Sentiment

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(Bloomberg) — Chinese tech stocks edged higher on Tuesday after a volatile trade, as investors weighed optimism from Beijing’s approval of new video game licenses against worries over rising interest rates and Covid-19 lockdowns.

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The Hang Seng Tech Index advanced 1.4% at the close, snapping four sessions of declines. Bilibili Inc. and GDS Holdings Ltd. were the best performers. The benchmark Hang Seng Index rose 0.5%, in line with a broader market rally.

China ending its months-long freeze on gaming approvals will likely help ease market anxiety that’s plagued the sector following a yearlong crackdown. Still, investors remain wary over other headwinds, including a surge in Treasury yields before U.S. inflation data due later, and a dimming growth outlook for China as lockdowns continue.

Read more: China Ends Game Freeze by Approving First Titles Since July

“The market is waiting for the U.S. inflation figure so the broader sentiment is a bit cautious today, despite the good news in the regulatory front in China,” said Linus Yip, a strategist at First Shanghai Securities. “Investors won’t pile in at this moment given so many uncertainties, such as pace of rate hikes, Covid situation in China and that property crackdown is still going on.”

Chinese authorities’ actions to stabilize markets in recent weeks have done little to soothe market jitters, with the broader Hang Seng Index down nearly 9% this year and China’s benchmark CSI 300 down some 15%.

On Monday, the China Securities Regulatory Commission again pledged further support to the “healthy” development of listed companies.

Meanwhile, Alibaba Group Holding Ltd. climbed 0.5% even as the Daily Journal Corp., a newspaper and software business that counts Charlie Munger as one of the overseers of its stock portfolio, cut its stake in half.

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